THE 


THE  LIBRARY 

OF 
THE  UNIVERSITY 

OF  CALIFORNIA 
RIVERSIDE 


THE      rv-i  «j"0a 
POLITICS  OF  INDUSTRY 

A  foot-note  to  the  Social  Unrest 


BY 

GLENN  FRANK 

>ij 

Associate  Editor  of  the  Century  Magazine 
Co-author  of  "Stakes  of  the  War" 


NEW  YORK 

THE  CENTURY  CO. 

1919 


HC 


Copyright,  19 19,  by 
THE  CENTUET  Co. 


Published,  June,  1919 


TO 
THE  TWO  MEN  TO  WHOM  I  AM  MOST  PROFOUNDLY  INDEBTED 

GORDON  FRANK 

AND 

AMBROSE  HENRY  FLOOD  SMITH 


FOREWORD 

There  is  clear  necessity  that,  in  this  day  of 
unrest  and  revaluation,  the  leaders  of  Ameri- 
can business  and  industry  face  fresh  problems 
with  fresh  minds.  The  real  center  of  social 
authority  has  so  far  shifted  from  politics  to  in- 
dustry that  the  tone  and  temper  of  our  na- 
tional life  are  more  nearly  determined  by  the 
way  the  business  and  industry  of  the  country 
are  conducted  than  by  the  way  the  government 
is  conducted.  The  statesmanship  or  stupidity 
of  business  men  is  of  more  social  significance 
than  the  statesmanship  or  stupidity  of  politi- 
cians. 

The  recognition  of  this  fact  brought  an  in- 
teresting task  into  my  hands.  During  the  past 
year  it  has  been  my  assignment  and  my  pleas- 
ure to  try  to  interpret  the  mind  and  attitude  of 
the  more  forward-looking  business  and  indus- 
trial leaders  of  this  country  in  relation  to  the 
social  and  industrial  unrest  and  the  pervasive 
spirit  of  change  that  marks  our  time.  I  have 


FOREWORD 

concerned  myself,  not  with  the  rank  and  file, 
but  with  those  anonymous  liberals  of  the  busi- 
ness world — the  men  who  may  perchance  be  the 
pioneers  of  a  new  order  of  business  and  indus- 
try. I  have  tried  to  catch  their  spirit  rather 
than  quote  their  words.  This  volume  is  the  re- 
sult. 

The  five  papers  appearing  in  this  volume 
have  before  appeared  in  THE  CENTURY. 
Here  they  are  slightly  revised,  and  the  titles, 
in  all  but  one  instance,  changed.  I  am  deeply 
indebted  to  the  business  and  labor  leaders  who 
have  permitted  me  to  counsel  with  them  in  the 
preparation  of  this  foot-note  to  the  discontent 
of  our  time — the  un-named  collaborators  in  the 
writing  of  these  papers. 

GLENN  FRANK. 

NEW  YORK,  June,  1919. 


CONTENTS 

FIRST  PAPER  rAOE 

A  NATION  OF  IMPEOVISEES 3 

A  warring  nation  unprepared  for  war — A  peaceful 
nation  unprepared  for  peace — The  spell  of  the 
immediate — Learning  to  anticipate  and  to  dis- 
count crises — Immediate  problems  of  transition 
economics — Long  time  problems  of  policy — Unity 
of  opinion  in  war-time — Diversity  of  opinion  in 
peace-time — If  we  had  a  Peace  Book. 

SECOND  PAPER 
THE  BACKGROUND  OP  RECONSTRUCTION     i,     .     .    17 

A  social  doomsday — The  myth  of  a  fixed  world — 
The  contagion  of  change — Latest  aspirations  find 
voice  and  vitality — Devising  new  policies  for  a 
new  world — The  man  of  affairs  turns  social  sci- 
entist— A  time  of  transition — A  century  of  prog- 
ress in  a  decade — Burbanks  of  business — Revolu- 
tion balances  the  ledger — Retained  attorneys  for 
dead  men's  policies — Knowing  enough  about  all 
things  to  keep  one's  own  work  in  right  perspec- 
tive— The  social  waste  of  our  scrap-heap  for  lead- 
ers— A  nation  that  knows  where  it  is  going. 

THIRD  PAPER 
ANONYMOUS  LIBERALISM 42 

The  statesman's  General  Staff — The  new  spirit  in 
business — Professions  vs.  Trade — The  intellectual 
challenge  of  modern  business — The  social  function 


CONTENTS 

PAGE 

of  the  business  man — Henry  Ford's  peace  ship 
vs.  Henry  Ford's  farm  tractor — Efficient  produc- 
tion— Just  distribution — Wise  consumption — 
Trade  ethics — Business  leadership  and  the  social 
unrest — The  menace  of  the  firing-squad  mind — 
Twenty  business  men  and  a  Magna  Charta  for 
American  industry. 

FOURTH  PAPER 
THE  POLITICS  OP  INDUSTRY  ........     93 

Making  war  with  phrases  vs.  Making  war  with 
principles — A  phrase  that  will  haunt  the  coun- 
sels of  business  and  industry — The  Balance  of 
Power  system  breaks  down  in  both  international 
and  industrial  relations — Competition  and  drift 
vs.  cooperation  and  control — The  futility  of  half- 
measures — The  origin  of  the  modern  labor  prob-  ' 
lem — A  glance  at  handicraft  days — Lost  assets 
of  modern  industry — Fighting  for  a  lost  control 
— Inadequate  expedients — Collective  bargaining — 
Strikes  —  Lockouts  —  Conciliation  —  Arbitra- 
tion— Investigation — Social  legislation — Welfare 
work — Profit-Sharing — Scientific  Management — 
What  the  ultimate  labor  issue  is — Competitive 
bargaining  vs.  Cooperative  government — England 
moves  toward  industrial  self-government — The 
Whitley  Report  analyzed — Making  industry  a 
training  school  for  political  citizenship. 

FIFTH  PAPER 
BUSINESS  STATESMANSHIP 151 

Decentralizing  statesmanship— Political  policemen 
vs.  Business  statesmen — Conservatives  and  radi- 
cals join  forces  against  political  bureaucracy — 
The  current  sets  against  the  bureaucratic  state 
and  the  Socialistic  state  for  same  reason — The 


CONTENTS 

PAGE 

center  of  social  authority  shifts  from  politics  to 
industry — Making  the  invisible  government  vis- 
ible and  socially  responsible — A  state  that  cannot 
meet  an  emergency  without  abdicating — Repre- 
sentative government  lags  behind  the  facts  of 
modern  life — American  government  not  designed 
for  quick  response  to  public  will — Business  meets 
demands  of  awakened  labor  with  statesmanship 
instead  of  blind  antagonism — Business  democracy 
vs.  business  autocracy — A  forecast — A  store  tries 
self-government. 


APPENDIX 195 

(1)  THE  WHITLET  REPORT  ......  195 

(2)  LETTER  FROM  THE  MINISTER  OF  LABOUR    .  207 

An  explanation  of  the  British  Government's  view 
of  its  proposals. 


THE  POLITICS  OF  INDUSTRY 


THE  POLITICS  OF  INDUSTRY 


A  NATION   OF  IMPEOVISEBS 

A  warring  nation  unprepared  for  war — A  peaceful  nation  un- 
prepared for  peace — The  spell  of  the  immediate — Learning 
to  anticipate  and  to  discount  crises — Immediate  problems 
of  transition  economics — Long  time  problems  of  policy — 
Unity  of  opinion  in  war-time — Diversity  of  opinion  in 
peace-time — If  we  had  a  Peace  Book. 

WE  have  come  near  to  missing  an  appoint- 
ment with  destiny  through  our  palter- 
ing indecision  respecting  the  issues  of  readjust- 
ment left  in  the  wake  of  the  war.  We  learned 
in  a  costly  school  what  it  means  to  become  a 
warring  nation  unprepared  for  war;  we  are 
now  in  the  equally  embarrassing  position  of 
a  peaceful  nation  unprepared  for  peace.  No 
small  share  of  the  responsibility  for  our  plight 
is  traceable  to  the  cowardly  conception  of  mo- 
rale that  dictated  the  subject  and  determined  the 
direction  of  our  public  thought  during  the  war. 
We  manifested  an  intolerant  impatience  with 


4        THE  POLITICS  OF  INDUSTRY 

any  proposal  that  did  not  relate,  or  purport  to 
relate,  to  the  effective  prosecution  of  the  war. 
We  deliberately  chose  to  be  a  nation  of  single- 
track  minds.  In  a  manner  we  shall  be  heartily 
ashamed  of  some  day,  we  subjected  American 
opinion  to  propagandist  organizations  manned, 
too  frequently,  by  hysterical  professors  who  had 
taken  a  leave  of  absence  both  from  their  uni- 
versities and  from  their  scholarly  judgment. 
There  was,  of  course,  a  show  of  reason  in  our 
procedure.  When  the  foundation  of  one's 
house  is  being  undermined  is,  of  course,  no 
time  for  the  complacent  discussion  of  interior 
decorations.  For  all  their  importance  in  nor- 
mal times,  there  were  many  rights  and  causes 
which  had  to  adjourn  their  claim  upon  the  na- 

• 

tion's  attention  until  the  urgent  business  of 
war  was  concluded.  The  scattered  energies  of 
the  nation  had  to  be  knit  and  kept  knit  into  a 
forceful  unity. 

With  this  necessity  in  mind  we  attempted,  by 
ruthless  concentration,  to  rule  out  the  wasting 
even  of  thought  on  non-essentials.  But  a  con- 
centration that  found  no  time  for  a  systematic 
study  in  advance  of  the  social,  economic,  and 
political  problems  that  we  abruptly  faced  when 
the  war  ended  is  now  seen  to  have  been  a  vi- 


A  NATION  OF  IMPROVISERS         5 

sionless  and  dangerous  policy.  There  is  such 
a  thing  as  the  treason  of  misguided  emphasis. 

As  a  people  we  have  never  quite  acquired  the 
habit  of  preparing  well  in  advance  for  even  the 
most  predictable  demands  of  the  future.  We 
are  in  many  ways  a  nation  of  improvisers. 
Our  social  and  political  thinking  is  too  often 
done  under  the  spell  of  the  immediate.  We 
wait  until  a  crisis  is  upon  us,  and  then  hastily 
provide  some  expedient  which  we  permit  to 
crystallize  into  a  tradition  that  becomes  an  ob- 
stacle to  consistent  progress.  But  our  democ- 
racy must  in  self-defense  learn  to  anticipate 
and  to  discount  crises.  Our  social  and  polit- 
ical policies  must  not  be  created  over  night  in 
the  heat  and  hurry  of  a  critical  situation. 
They  must  be  got  ready  before  the  crisis  devel- 
ops. The  wastefulness  of  the  trial  and  error 
process  must  be  minimized  by  a  public  mind 
that  can  think  of  two  things  at  once,  especially 
when  those  two  things  are  as  vitally  inter-de- 
pendent as  a  day  and  the  day  after. 

Nowhere  has  this  principle  applied  with 
greater  force  than  to  the  necessity  for  our  hav- 
ing given  sustained  attention  to  after-the-war 
problems  even  while  we  were  most  immersed  in 
during-the-war  problems.  The  problems  of 


6        THE  POLITICS  OF  INDUSTRY 

war  and  the  problems  of  peace  were  not  joined 
cleanly  like  flag-stones  or  bits  in  a  mosaic; 
there  was  an  overlapping,  a  blending.  They 
should,  therefore,  have  been  dealt  with  abreast, 
not  tandem. 

When  peace  was  declared,  the  United  States 
was  confronted  with  many  serious  domestic 
problems;  immediate  problems  of  transition 
economics  that  called  for  measurably  quick  ac- 
tion, and  long  time  problems  of  policy,  the  ad- 
equate treatment  of  which  promises  to  involve  a 
reexamination  of  the  foundations  of  our  politi- 
cal and  industrial  polity.  A  categorical  listing, 
under  these  two  headings,  of  a  few  of  our  na- 
tional problems  will  serve  to  visualize  the  chal- 
lenge to  our  national  ingenuity  involved  in  the 
transition  of  American  life  from  a  war  footing 
to  a  peace  footing. 

Among  the  problems  of  transition  economics 
that  became  immediately  pressing  with  the  end- 
ing of  the  war  may  be  listed : 

1.  The  demobilization  of  our  Army,  involv- 
ing the  concurrent  demobilization  of  our  mu- 
nitions workers  and  all  others  who  were  en- 
gaged in  war  work.  As  part  of  this  demobil- 
ization process  we  must  deal  with  the  problem 
of  unemployment  which  may  attend  demobil- 


A  NATION  OF  IMPKOVISERS         7 

ization  unless  sound  policy  and  adequate  or- 
ganization are  brought  to  the  question ;  here  ap- 
pears the  necessity  for  a  net-work  of  carefully 
conceived  and  executed  surveys  that  will  show 
the  vocational  adaptabilities  of  the  returning 
soldiers  and  the  man-power  needs  of  Ameri- 
can industries  and  farms;  this  demobilization 
raises  afresh  the  problem  of  a  reorganization 
of  many  American  industries  along  lines  that 
will  better  meet  the  problem  of  seasonal  em- 
ployment which  contributes  so  much  toward  un- 
employment at  certain  times. 

2.  The  larger  implications  of  shifting  Amer- 
ican industrial  organization  from  a  war  footing 
to  a  peace  footing,  involving  as  that  does  the 
determination  of  the  new  uses  to  which  war 
plants  shall  be  put ;  the  charting  of  the  field  of 
commodity  demands  that  were  adjourned  dur- 
ing the  war  but  which  now  may  serve  to  absorb 
the  output  of  the  increased  productive  machin- 
ery and  power  brought  about  by  the  war;  and 
the  necessary  readjustment  of  machinery  and 
personnel  to  the  new  output.  Here  are  like- 
wise involved  the  intricate  problems  of  prices 
and  wages  which  will  so  largely  determine  the 
satisfaction  or  discontent  under  which  the  pro- 
cess of  transition  will  be  carried  on. 


8        THE  POLITICS  OF  INDUSTRY 

3.  The  reeducation  of  crippled  and  semi-dis- 
abled soldiers  and  the  fitting  of  them  back  into 
the  industrial  life  of  the  nation. 

4.  The  prompt,  if  not  final,  determination  of 
the  basis  upon  which  we  purpose  to  conduct  the 
transportation  and  communication  systems  of 
the  country. 

5.  The  possible  uses  of  reclaimed  lands  for 
soldier  and  further  civilian  settlement. 

6.  The  handling  of  raw  materials,  involving 
as  that  does  a  study  of  our  duties  and  interests 
in  the  matter  of  supplying  the  European  de- 
mand for  raw  materials,  a  study  of  the  raw  ma- 
terials we  shall  need  from  foreign  sources  and 
the  understandings  that  are  to  be  reckoned 
with  in  getting  them,  a  study  of  the  disposition 
of  the  raw  materials  left  in  the  hands  of  the 
Government  at  the  termination  of  the  war,  and 
the  underlying  problem  of  the  regulation  of  the 
movement  of  raw  materials. 

7.  The  transfer  from  war  exports  to  their 
substitute  peace  exports. 

8.  The  organization  of  American  production 
to  meet  the  demands  growing  out  of  the  physi- 
cal reconstruction  of  the  devastated  regions  of 
Europe  and  the  related  demands  of  industrial 
reconstruction. 


A  NATION  OF  IMPROVISERS         9 

9.  The  determination  of  American  policies 
that  will  meet  the  centralized  purchasing  meth- 
ods and  organizations  being  instituted  in  Eur- 
ope. 

10.  The  sound  adjustment  of  American  tariff 
policy  to  actual  conditions  in  such  a  manner  as 
will  protect  the  legitimate  interests  of  both  pro- 
ducer and  consumer  and  at  the  same  time  not 
run  counter  to  our  international  responsibility 
for  helpfulness  in  the  physical  reconstruction 
of  Europe  and  the  fairest  of  fair  play  in  the 
next  few  years  while  the  nations  of  Europe  are 
commercially  getting  on  their  feet  after  the  dis- 
rupting experience  of  the  war  which  was  ours 
no  less  than  theirs;  a  tariff  policy  that  will 
neither  play  a  role  of  super-sentiment  nor  lie 
open  to  the  charge  of  purposing  to  capitalize 
advantages  accrued  from  the  waging  of  an  un- 
selfish war. 

11.  The   administration   of   our   augmented 
gold  supply  in  a  manner  that  will  best  reestab- 
lish international  credit  and  stability, — and  a 
score  of  equally  vital  problems. 

This  is  a  large  enough  number  of  the  imme- 
diate transition  problems  to  throw  into  con- 
trast with  some  of  the  long  time  problems  of 
policy  which  the  war-altered  world  has  forced 


10      THE  POLITICS  OF  INDUSTRY 

upon  us.    Of  these  latter  it  is  sufficient  to  men- 
tion the  following: 

1.  A  national  labor  policy.    We  need  frankly 
to  face  the  necessity  for  finding  and  formulat- 
ing the  policy  that  will  most  nearly  insure  con- 
tinuing harmony  between  employers  and  em- 
ployees.   The  whole  question  of  our  national 
progress  and  happiness  is  bound  up  in  that. 
Dare  we  hope  for  an  ultimate  solution  from  the 
processes  of  conciliation  as  exemplified  in  the 
work  of  our  National  War  Labor  Board,  from 
the  give  and  take  of  collective  bargaining  and 
a  balance  of  power  see-saw  between  capital  and 
labor,  or  does  the  way  out  lie  along  the  road 
toward   some   sort   of  industrial   self-govern- 
ment! 

2.  A  trust  policy.    We  need  to  determine 
once  for  all  whether  the  best  future  for  Amer- 
ican national  life  demands  centralization  or  de- 
centralization.   If  the  conclusion  gives  the  ver- 
dict to  centralization,  then  we  must  consider 
how  the  fruits  of  centralization  may  be  guaran- 
teed for  the  common  good  instead  of  private  in- 
terests in  an  unsocially  limited  sense. 

3.  A  foreign  trade  policy.    We  need  to  con- 
sider the  sort  of  foreign  trade  policy  that  will 
best  consolidate  the  gains  in  moral  leadership 


A  NATION  OF  IMPROVISERS       11 

which  we  have  made  during  the  war  in  interna- 
tional affairs.  But  we  need  to  apply  with  a 
new  intensity  the  most  scientific  methods  to  the 
study  of  our  past  foreign  trade  methods  with 
the  view  to  putting  them  upon  a  basis  of 
greater  efficiency  for  the  keen  contests  which 
lie  ahead.  I  do  not  think  American  foreign 
trade  should  be  turned  into  an  agency  of  exhor- 
tation in  behalf  of  American  ideals  to  the  ex- 
clusion of  a  straightforward  and  aggressive 
contest  for  our  share  of  the  commerce  of  the 
world, — such  an  adventure  would  be  taken  ad- 
vantage of  as  much  as  it  would  be  appreciated, 
— but  it  does  need  to  be  remembered  that  the 
exporter,  in  a  peculiar  sense,  holds  the  honor 
and  ideals  of  his  nation  in  his  hands.  And  all 
in  all  our  foreign  trade  should  clarify  and  not 
contradict  the  international  ethics  for  which 
our  statesmanship  has  so  consistently  stood 
throughout  the  war  and  in  the  considerations 
of  peace. 

4.  A  research  policy.    We  need  to  organize 
the  research  abilities  of  the  nation  in  a  manner 
that  will  put  a  foundation  of  fact  under  our  po- 
litical and  industrial  calculations  to  a  degree 
that  we  have  not  heretofore  reached. 

5.  A  national  educational  policy.    We  need 


12      THE  POLITICS  OF  INDUSTRY 

to  throw  a  concentrated  national  attention  upon 
the  adjustment  of  our  educational  system  to 
the  new  demands  of  this  new  day.  We  need  to 
insure  to  the  average  child  the  opportunities  of 
vocational  education,  not  a  vocational  educa- 
tion that  trains  in  technic  alone  and  mechanizes 
the  mind  of  the  child,  but  a  vocational  educa- 
tion that  awakens  the  creative  impulse.  We 
need  to  rid  our  educational  system  of  the  ele- 
ments of  standardization  and  quantity  produc- 
tion that  have  blighted  it  to  such  a  marked  ex- 
tent in  the  past.  We  need  to  reconsider  the 
curricula  of  our  colleges  and  universities  to  the 
end  that  the  college  graduate  may  be  better 
oriented  to  his  world  and  may  face  his  prob- 
lems not  merely  with  the  possession  of  a  num- 
ber of  unrelated  blocks  of  information,  but  with 
that  spacious  mindedness  which  comes  from  a 
truly  liberal  education. 

6.  An  Americanization  policy.  The  need 
here  is  for  something  more  than  social  settle- 
ment classes  in  English.  We  must  somehow  in- 
fuse the  immigrant  with  the  American  spirit  and 
awaken  in  him  a  fundamental  respect  for  Amer- 
ican institutions.  Of  course  we  may  have  to 
change  some  of  our  institutions  before  succeed- 
ing 'fully  in  that  venture,  but  the  fact  remains 


A  NATION  OF  IMPEOVISERS       13 

that  we  have  failed  in  this  respect  in  the  past. 
Some  of  the  most  disturbing  characters  in  the 
red  revolutions  of  Europe  are  men  and  women 
who  lived  in  our  midst  before  the  war  and  went 
back  to  Europe  with  a  sneer  on  their  faces  say- 
ing, "Are  we  going  to  organize  a  Republic  af- 
ter our  revolution  T  No.  The  United  States  is 
a  Republic. "  Whether  these  men  were  right 
or  wrong  in  their  sneer  is  beside  the  mark  I 
am  aiming  at  here,  which  is  to  state  the  chal- 
lenge which  the  presence  of  a  large  foreign 
born  element  in  our  midst  makes  to  us  for  a 
genuine  Americanization  policy. 

7.  The  underlying  problem  of  striking  a  just 
balance  of  judgment  and  legislation  between 
necessary  emergency  measures  and  fundamen- 
tal solutions,  so  that  in  the  end  we  may  be  the 
beneficiaries  of  a  boldly  conceived  and  states- 
manlike reconstruction  instead  of  a  temporiz- 
ing patchwork  of  palliatives. 

What  we  did  not  fully  reckon  with  in  advance 
is  the  fact  that  political  leadership  is  in  a  less 
favored  position  for  dealing  with  these  prob- 
lems of  reconstruction  than  it  enjoyed  in  dealing 
with  the  problems  of  war.  During  the  war  the 
necessity  for  presenting  a  solid  front  to  the  en- 
emy drove  diversity  of  opinion  to  cover  and 


gave  constituted  authority  a  measurably  clear 
field  for  action,  except  for  sporadic  flurries  of 
criticism.  In  war  time  the  issues  were  subject 
to  relative  simplification.  There  were  not  the 
usual  complications  of  party  and  class  inter- 
ests. Particularist  claims  were  postponed  in 
deference  to  the  supreme  issue  of  the  emer- 
gency. Speaking  in  the  large,  there  was  in  war 
time  one  clear  road  to  an  agreed-upon  goal. 

But  all  that  changed  over  night  when  peace 
came.  Pent-up  differences  of  opinion  were 
released.  The  embargo  on  partizanship  was 
lifted.  The  forces  of  reaction  remobilized. 
Eadicalism  resumed  its  rights  of  criticism. 
Guided  by  the  instincts  of  self-defense  and  self- 
expression,  the  various  classes  and  points  of 
view  that  comprise  our  national  life  gravitated 
toward  common  centers  in  support  of  common 
interests  and  ideas.  There  is  not  the  unity  of 
opinion  about  the  goal  of  national  effort  that 
obtained  during  the  war.  There  is  even  less 
unity  of  opinion  about  the  roads  leading  to  any 
goal.  Issues  are  so  numerous  and  complicated 
that  political  leadership  finds  it  difficult  to  mold 
public  opinion  by  occasional  speeches  as  in  war 
time.  And  above  all,  the  difficulties  and  dan- 
gers are  at  our  very  door;  there  are  no  Allies 


A  NATION  OF  IMPROVISERS       15 

to  hold  the  line  while  we  are  getting  ready  to 
act. 

The  problem  of  physical  reconstruction  is 
not  an  extensive  and  pressing  problem  with  us, 
as  with  France  and  Germany,  for  instance ;  but 
we  face  a  difficult  and  important  time,  never- 
theless. And  what  is  most  important  of  all, 
the  end  of  the  war  has  given  us  the  chance  to 
do  many  unprecedented  things  that  will  set  us 
forward  for  a  generation  in  political  and  social 
organization  if  we  act  while  the  flush  of  the 
creative  moment  is  on,  while  the  spirit  of  read- 
justment is  still  in  the  air,  and  before  the  old  so- 
cial inertia  and  our  everyday  spirit  take  posses- 
sion of  us  once  more.  The  public  mind  is  to-day 
highly  sensitive  to  suggestion,  because  the  is- 
sues of  politics  and  industry  to-day  are  recog- 
nized as  touching  vitally  the  personal  future 
and  fortune  of  every  American.  We  must 
somehow  contrive  to  overcome  the  handicap  of 
unpreparedness  for  peace  if  we  are  not  to  be 
captured  by  catch  words,  ruled  by  snap  judg- 
ment, and  rifled  by  special  interests. 

A  fatal  trust  in  our  facility  for  improvising 
brought  us  to  the  end  of  the  war  without  any 
adequate  advance  preparation  having  been 
made,  either  by  the  government  or  by  voluntary 


16      THE  POLITICS  OF  INDUSTRY 

groups,  for  the  readjustment  period.  We  have 
no  American  " peace  book''  affording  a  sound 
fact  basis  upon  which  our  political,  business,  la- 
bor and  educational  leadership  can  operate.  If 
we  had  such  a  " peace  book"  it  would  go  far  to- 
ward preventing  a  capture  of  the  public  mind  by 
the  special  pleader  and  the  demagogue.  It 
would  give  a  sweep  and  grasp  to  the  legislative 
thought  of  the  country  beyond  anything  that 
can  be  hoped  with  each  legislator  himself  at- 
tempting to  visualize  the  entire  problem.  It 
would  be  invaluable  in  helping  every  business 
man,  labor  leader,  and  educator  to  orient  his 
problem  and  policy  to  the  whole  situation.  It 
would  induce  among  us  the  habit  of  thinking 
nationally;  and  that  we  must  do  if  we  are  to 
meet  in  an  adequate  manner  the  new  demands 
of  the  new  world  that  this  war,  with  all  of  its 
tragedy,  has  created. 


n 

THE  BACKGROUND   OF   RECONSTRUCTION 

A  social  doomsday — The  myth  of  a  fixed  world — The  conta- 
gion of  change — Latent  aspirations  find  voice  and  vitality — 
Devising  new  policies  for  a  new  world — The  man  of  affairs 
turns  social  scientist — A  time  of  transition — A  century  of 
progress  in  a  decade — Burbanks  of  business — Revolution 
balances  the  ledger — Retained  attorneys  for  dead  men's 
policies — Knowing  enough  about  all  things  to  keep  one's 
own  work  in  right  perspective — The  social  waste  of  our 
scrap-heap  for  leaders — A  nation  that  knows  where  it  is 
going. 

WE  are  a  cautious  people,  skeptical  of 
easy  generalizations,  but  it  is  now  rec- 
ognized on  all  hands  that  the  war  has  shaken 
down  about  our  ears  an  old  order  of  things. 
The  sociologist  has  been  talking  about  some 
such  doomsday  for  the  last  decade,  but  his  pre- 
dictions have  not  been  taken  seriously  as  the 
basis  for  practical  policies  by  men  of  affairs. 
Now,  however,  we  are  in  actual  grapple  with  a 
thousand  and  one  newly  released  forces  which 
we  must  either  master  or  be  mastered  by  in  the 
determination  of  a  new  order  of  things.  It  is 
not  the  analyses  of  the  class-room,  but  the  ac- 

17 


18      THE  POLITICS  OF  INDUSTRY 

tualities   of  the  market-place,  that  have  set 
everyone  talking  about  a  changing  order. 

There  is  a  disposition  in  many  quarters,  how- 
ever, to  minimize  the  importance  of  American 
reconstruction — a  disposition  to  say  that  it  is 
well  enough  for  Great  Britain  to  set  up  the 
elaborate  machinery  of  a  ministry  of  recon- 
struction because  Great  Britain  has  been  on 
the  edge  of  the  battle-field  for  four  and  a  quar- 
ter years  and  the  whole  texture  of  her  life  has 
been  disarranged;  but  that  the  brief  valor  of 
America's  war-making,  while  it  involved  exten- 
sive administrative  readjustments,  did  not 
place  such  a  strain  upon  the  social  conceptions 
and  industrial  relations  of  American  life  as  to 
require  of  us  the  fundamental  reexamination  of 
things  in  general  which  Great  Britain  seems  to 
have  been  feeling  her  way  toward.  There  is  a 
disposition  to  feel  that  we  shall  need  to  read- 
just the  business  of  American  life,  simply  as  an 
administrative  shift  from  war  to  peace,  but 
that  there  is  no  new  reason  for  reexamining  the 
bases  of  American  policy  in  business,  industry, 
education,  and  other  fields.  And  there  is  some 
show  of  reason  in  that  disposition  if  recon- 
struction is  regarded  as  simply  the  rearrange- 
ment of  things  that  war  has  disturbed,  as  one 


EECONSTEUCTION  19 

might  tidy  up  a  room  which  a  group  of  rowdies 
had  occupied  and  littered  up.  But  the  fact  is 
that  the  war  is  only  one  of  many  factors  that 
have  made  this  a  transition  day  in  history. 
The  war  did  not  of  itself  make  this  a  time  of 
transition;  the  war  merely  dramatized  and 
gave  added  urgency  to  processes  of  readjust- 
ment and  revaluation  that  were  already  under 
way  and  of  which  we  as  a  people  were  but  in- 
differently aware.  Before  the  war  we  were 
more  of  a  sheltered  people  than  we  like  to  ad- 
mit, creatures  of  an  isolation  that  had  been  quite 
as  much  a  matter  of  mind  as  of  geography. 
The  very  bigness  of  our  country  had  worked 
against  vivid  concentrations  of  our  social  and 
industrial  problems  that  might  have  made  us 
more  keenly  aware  of  the  forces  of  change  that 
were  getting  hold  of  the  world.  If  we  were  not 
unacquainted  with  the  ferment  that  was  work- 
ing throughout  Europe,  we  were  at  least  living 
in  the  quieter  suburbs  of  its  disturbing  effects. 

Before  the  war  a  long  period  of  peace  had 
lulled  us  into  a  false  sense  of  security.  Ex- 
cept when  we  forced  ourselves  to  analysis,  most 
of  us  determined  our  policies  and  ordered  our 
actions  upon  the  assumption  that  the  habits  of 
men  and  nations  were  relatively  fixed  or  at 


20      THE  POLITICS  OF  INDUSTRY 

least  predictable.  Despite  the  social  and  in- 
dustrial discontent,  the  political  ferment,  and 
the  ceaseless  readjustments  of  science  which 
marked  the  past  generation,  we  went  about  our 
affairs  with  a  certain  uncritical  confidence  that 
the  institutions,  policies,  and  forces  of  the 
world  were  labeled  and  catalogued  with  fair 
clearness,  and  that  the  direction  of  progress 
had  been  so  charted  that  we  could  lie  down  at 
night  and  in  the  morning  know  just  about  how 
far  and  in  what  direction  the  world  had  moved 
while  we  slept.  Then  suddenly  there  burst 
upon  the  world  this  war,  with  its  consequent 
results  of  revolution  and  revaluation.  In  the 
four  and  a  quarter  years  of  its  course  so  many 
accredited  theories  of  government  and  indus- 
try have  been  scrapped,  so  many  readjustments 
effected,  and  so  many  new  forces  released,  that 
now  when  we  lie  down  at  night  we  have  no  as- 
surance of  the  kind  of  world  to  which  we  shall 
awaken  in  the  morning.  Under  the  pressures 
of  war  it  seems  that  civilization  has  left  its 
comfortable  home  of  well-ordered  habits, 
broken  through  its  crust  of  custom,  and  in  the 
spirit  of  adventure  and  experiment  taken  to  the 
open  road.  The  whole  world  is  yeasty.  The 
latent  and  brooding  aspirations  of  a  century 


RECONSTRUCTION  21 

have  found  voice  and  vitality.  The  spirit  of 
change  which  has  entered  the  counsels  of  the 
world,  in  its  several  degrees  of  intensity  from 
moderate  reform  to  Bolshevism,  is  not  a  local- 
ized phenomenon  which  the  rest  of  the  world 
can  watch  in  a  detached  way,  as  it  might  a  lab- 
oratory experiment,  postponing  judgment  and 
action  until  the  experiment  offers  proof  of  its 
soundness  or  its  danger;  this  spirit  of  change 
is  a  contagion  which  eludes  constituted  author- 
ity and  crosses  frontiers  at  will.  It  is  no  trick 
of  rhetoric  to  call  this  a  "time  of  transition." 
The  phrase  runs  through  bank  bulletins  and  busi- 
ness men's  interviews  about  as  frequently  as 
through  the  literature  of  theory,  and  no  one 
will  indict  bank  bulletins  for  fervid  imaginings. 
This  spirit  of  interrogation  and  change  which 
marks  our  time  will  for  the  next  few  years  at 
least  constitute  the  very  atmosphere  which 
every  policy  of  government,  business,  industry, 
education,  and  religion  must  breathe.  It  is  of 
primary  importance,  therefore,  that  every  man 
who  carries  responsibilities  of  administration 
in  any  department  of  American  life  gain  a 
working  knowledge  of  the  new  forces,  new 
ideas,  and  new  alignments  which  are  to  give 
the  next  few  years  their  character  and  deter- 


22      THE  POLITICS  OF  INDUSTRY 

mine  the  success  or  failure  of  every  individual 
or  corporate  plan.  It  has  long  been  a  truism 
of  foreign  trade  that  the  business  man  must 
study  his  market,  not  merely  market  quota- 
tions but  the  character  and  customs  of  the  peo- 
ple to  whom  he  would  sell,  their  likes  and  dis- 
likes, their  whims ;  that  his  salesman  must  ad- 
just his  manners  and  methods  to  the  etiquette 
of  the  foreign  purchasers;  that  to  be  exotic 
either  in  his  goods,  their  package,  or  their  pres- 
entation is  bad  business.  The  threadbare  bur- 
lesque of  the  failure  to  study  one's  market  is 
the  exporter  who  would  try  to  sell  furs  in  the 
tropics  and  fans  in  the  arctic  zone.  To-day 
that  principle  carries  a  wider  application. 
Our  problem  is  more  than  one  of  adjusting  our 
goods  to  a  new  market ;  our  problem  is  that  of 
adjusting  all  of  our  fundamental  policies  to  a 
new  world. 

The  most  practical  thing,  therefore,  that  the 
man  of  affairs  can  do  at  this  time  is  to  turn  so- 
cial scientist  in  dead  earnest  until  he  has  surely 
seen,  understood,  valuated,  and  found  a  basis 
for  reckoning  with  the  complicated  and  far- 
reaching  implications  of  this  new  era  that  has 
been  germinating  for  a  generation  and  which 
the  war  has  called  suddenly  to  life.  As  a  prac- 


RECONSTRUCTION  23 

tical  service  to  practical  men,  therefore,  I  want 
to  make  several  more  or  less  unrelated  observa- 
tions upon  times  of  transition  in  general  and 
this  one  in  particular.  I  do  this  even  at  the  risk 
of  appearing  abstract  and  discursive,  for  in  my 
judgment  the  larger  implications  of  the  spirit 
of  change,  of  experiment,  of  reconstruction 
which  is  stirring  throughout  the  world  are  of 
as  immediately  practical  concern  to  the  busi- 
ness man  as  the  figures  on  his  latest  cost-sheet, 
of  as  urgent  interest  to  the  servant  of  govern- 
ment as  the  latest  election  forecast,  of  as  much 
moment  to  the  educator  as  current  endowment 
prospects.  In  fact,  it  is  the  action  of  the  elu- 
sive human,  social,  and,  shall  I  say,  spiritual 
forces  loosed  by  the  war  that  may  more  nearly 
determine  the  success  or  failure  of  a  given  po- 
litical, social,  or  industrial  policy  than  effi- 
ciency or  blundering  in  the  mechanics  of  admin- 
istration. 

I  shall  ask  the  reader  to  go  along  with  me 
as  leisurely  as  he  may  and  not  grow  impatient 
for  " practical"  deductions  concerning  the  next 
problem  that  awaits  his  decision  at  the  office. 
It  would  be  a  reversal  of  intelligent  planning  to 
discuss  specific  policies  before  analyzing  the 
situation  the  policies  must  meet. 


24      THE  POLITICS  OF  INDUSTRY 

Here,  then,  let  us  set  down  some  of  the  things 
that  mark  an  epoch  of  readjustment,  like  the 
sixteenth-century  Reformation,  for  instance, 
but  more  particularly  our  own  time. 

A  time  of  revaluation  which  bridges  two  or- 
ders of  things  always  makes  possible  a  speed- 
ing up  of  evolution,  an  opportunity  which,  as 
history  regrettably  records,  has  not  always 
been  taken  advantage  of.  This  is  not  in  vio- 
lation, but  in  fulfilment,  of  natural  law,  for  bi- 
ology reckons  with  the  possibility  of  quick 
growth  as  well  as  slow  growth ;  biology  is  based 
upon  the  twin  laws  which  have  been  called  the 
law  of  gradualism  and  the  law  of  the  sudden 
leap.  American  society  is  just  now  at  a  point 
where  the  law  of  the  sudden  leap  may  come  into 
valuable  play  unless  it  is  deliberately  defeated 
by  reactionary  interference.  The  stage  is  set 
for  the  accomplishment  of  an  amount  of  prog- 
ress within  the  next  ten  years — in  the  direction 
of  greater  efficiency  in  work  and  finer  justice 
in  relations — which  in  normal  times  might  take 
a  century.  In  fact,  this  is  the  central  sig- 
nificance of  the  reconstruction  period  as  far  as 
the  United  States  is  concerned.  On  any  other 
basis  the  word  " reconstruction"  is  something 
of  a  misnomer  when  applied  to  the  American 


RECONSTRUCTION  25 

situation.  We  rightly  used  the  word  "recon- 
struction" to  describe  the  period  following  our 
Civil  War :  we  were  restoring  former  rights  to 
seceded  States  and  relating  them  to  privileges 
of  the  Union.  The  word  is  being  rightly  used 
in  most  of  the  belligerent  countries  of  Europe 
where  devastated  regions  demand  physical  re- 
construction, and  where  the  debris  of  over- 
thrown governments  must  be  removed  and  new 
governments  set  up.  But  in  this  country  the 
war,  for  all  its  upsetting  of  traditions  and 
quick  enforcement  of  reorganization  in  busi- 
ness and  industry,  did  not  tear  our  national 
life  to  pieces  to  an  extent  that  produced  a  re- 
construction problem  that  cannot  be  taken  care 
of  as  a  part  of  the  day's  work.  I  am  not  here 
taking  back  what  I  say  elsewhere  about  the  na- 
tional importance  of  constructive  foresight;  I 
am  not  reverting  to  the  unconscious  assumption 
that  has  played  such  a  large  role  in  American 
affairs  in  the  past — that  we  are  the  favored 
wards  of  Good  Luck.  I  have  in  mind  just  what 
Mr.  Wilson  had  in  mind — unless  I  misinterpret 
him — when,  just  before  sailing  for  Europe,  he 
said:  "It  will  not  be  easy  to  direct  the  return 
to  a  peace  footing  any  better  than  it  will  direct 
itself.  The  American  business  man  is  of  quick 


26      THE  POLITICS  OF  INDUSTRY 

initiative."  Certain  of  the  liberal  journals 
took  Mr.  Wilson  to  task  for  this  assertion, 
and  in  a  measure  implied  that  he  had  for 
the  time  fallen  short  of  the  creative  leader- 
ship in  reconstruction  which  his  previous  pro- 
nouncements gave  us  the  right  to  expect  from 
him.  I  do  not  think  so.  I  think  Mr.  Wil- 
son had  in  mind  the  fact  that  reconstruction, 
in  the  strictly  accurate  sense  of  the  word,  is  not 
the  major  problem  for  America  as  it  is  for 
France,  to  take  only  one  example.  He  knew 
that  it  would  be  bad  tactics  to  tie  up  the  whole 
program  of  liberal  advance  with  the  conception 
of  reconstruction,  for  practical  men  already 
feel  that  the  wholesale  application  of  the  word 
to  the  American  situation  is  a  forced  use  of  the 
word  and  smacks  of  the  theorist-reformer. 
Then,  too,  a  word  like  "reconstruction"  is  a 
standing  invitation  to  every  man  with  a  pan- 
acea concealed  on  his  person.  Under  its  lure 
all  Utopian-minded  persons  are  resurrecting 
and  refurbishing  all  their  dead  dreams  and 
throwing  them  on  the  study-table  of  statesman- 
ship and  business.  Mr.  Wilson  knew  that  be- 
fore long  the  word  "reconstruction"  would  be 
associated  in  the  minds  of  responsible  men  with 
all  sorts  of  impossible  proposals,  and  that  the 


EECONSTKUCTION  27 

merging  of  the  whole  program  of  solid  advance 
with  the  temporary  process  of  shifting  the 
country  from  a  war-footing  to  a  peace-footing 
would  return  to  plague  him  later.  It  has  been 
an  important  part  of  his  political  technique  to 
keep  proposed  programs  free  from  stereotyped 
labels,  which  always  tend  to  crystallize  opposi- 
tion and  to  set  opinion  before  all  of  the  facts 
have  been  examined. 

It  may  seem  that  I  have  wandered  a  bit  from 
the  proposition  with  which  I  began,  namely, 
that  the  central  importance  of  this  time  of  tran- 
sition is  that  it  gives  us  the  chance  to  speed  up 
evolution  and  accomplish  in  the  next  few  years 
what  in  normal  times  might  take  us  a  century. 
But  I  stepped  aside  to  comment  upon  Mr.  Wil- 
son's statement,  by  way  of  illustrating  the  im- 
portance of  distinguishing  between  the  things 
that  must  be  done  'and  the  things  that  may  be 
done  in  the  fluid  times  through  which  we  are  just 
passing,  the  importance  of  restricting  the  word 
"reconstruction"  to  the  more  or  less  mechani- 
cal processes  of  readjustment  that  must  be 
done,  and  leaving  the  wide  field  of  things  that 
may  be  done  free  from  the  handicap  of  a  word 
that  is  already  getting  hackneyed  and  losing  its 
power  to  stimulate  creative  imagination  in  the 


28       THE  POLITICS  OF  INDUSTRY 

men  who  stand  at  the  centers  of  real  authority 
and  power.  For  from  the  point  of  view  of 
strategy  there  is  more  likelihood  of  our  using 
to  the  full  the  present  opportunity  for  a  great 
advance  in  the  better  organization  of  our  com- 
mon life  if  we  do  not  make  everything  revolve 
about  the  strictly  technical  process  of  recon- 
struction which  may  incite  prejudice  and  antag- 
onisms more  than  it  inspires  to  political  and  in- 
dustrial creativeness.  It  will  be  one  of  the 
great  wastes  of  history  if  we  permit  the  pres- 
ent flexibility  of  things  to  stiffen  before  we 
wrest  from  the  situation  some  distinct  measure 
of  progress  or  if  we  slow  down  the  rate  of  prog- 
ress by  assembling  unnecessary  antagonisms 
around  a  catchword.  It  may  seem  that  I  have 
here  played  with  words  simply,  have  set  up  a 
distinction  without  a  difference;  but  the  dis- 
tinction is  real.  There  is  a  problem  of  transi- 
tion economics  which  men  had  in  mind  when 
the  word  " reconstruction'*  came  first  into 
vogue ;  but  as  the  war  went  on,  people  began  to 
feel  the  need  for  larger  and  more  permanent 
policies  determined  in  the  spirit  the  war  had 
revealed.  The  larger  meaning  of  the  present 
transition-time  lies  not  so  much  in  the  new 
problems  that  the  war  has  created  as  in  the  old 


RECONSTRUCTION  29 

problems  which  the  war  has  intensified  and  re- 
ferred anew  to  society  for  fresh  consideration. 
A  transition  period  in  history  always  drama- 
tizes the  necessity  for  the  conscious  control  and 
direction  of  civilization;  it  exposes  the  tragic 
social  cost  of  drift.  And  to-day  the  whole  pos- 
ture of  affairs,  in  business,  in  industry,  in  gov- 
ernment, and  in  education,  puts  it  squarely  to 
the  leadership  and  citizenry  of  American  de- 
mocracy to  choose  whether  the  development  of 
American  life  in  the  next  few  critical  years 
shall  be  the  outcome  of  a  planless  drift,  touched 
here  and  there  by  the  hastily  drawn  policy  of 
some  improviser,  or  the  result  of  intelligent 
foresight  expressed  through  social  invention, 
business  statesmanship,  and  political  creative- 
ness.  Now,  any  man  who  thinks  in  terms  of 
modern  science  believes  that  even  the  drift  of 
the  world  is  toward  the  good,  that  the  curve 
of  human  evolution  is  an  ascending  curve;  but 
such  a  man  knows  also  that  by  mixing  human 
intelligence  with  the  operation  of  natural  laws 
and  social  forces  better  results  may  be  arrived 
at  in  a  shorter  time  than  if  evolution  is  left 
to  shift  for  itself.  The  secret  of  Luther  Bur- 
bank's  unusual  public  service,  for  instance,  is 
not  that  with  a  magician's  wand  he  has  sum- 


30      THE  POLITICS  OF  INDUSTRY 

moned  from  the  thin  air  new  creations  of  veg- 
etables and  flowers ;  but  that  he  has  taken  nat- 
ural laws  and  natural  forces  that  were  already 
at  work,  and  by  mixing  human  intelligence  with 
them  has  produced  in  a  short  while  a  Shasta 
Daisy,  a  bigger,  better,  and  finer  daisy  than 
nature  would  have  produced  in  a  century  if  left 
to  herself.  In  the  readjustment  period  we  are 
entering  we  shall  need  the  services  of  a  great 
many  Luther  Burbanks  of  business,  of  indus- 
try, of  politics,  of  education,  men  who  by  the 
grace  of  analysis  can  see  where  contemporary 
forces  and  current  ideas  are  steering  the  coun- 
try, and  by  adding  conscious  plan  to  uncon- 
scious drift  play  the  general  to  these  political, 
social,  and  economic  tendencies,  and  get  for  us 
the  maximum  of  constructive  result  with  the 
minimum  waste  of  time  and  effort. 

But  a  few  social  Burbanks  will  not  insure 
stable  progress  in  our  readjustment  period. 
Unless  the  average  American  acquires  a 
broadly  intelligent  understanding  of  the  newer 
aspects  of  our  political,  social,  and  industrial 
problems  which  the  war  has  shoved  into  the 
foreground,  it  may  turn  out  that  even  though 
we  have  enough  brilliant  leadership  in  this 
country,  we  shall  fall  far  short  of  easily  real- 


RECONSTRUCTION  31 

izable  progress,  because  the  masses  of  our  cit- 
izens lack  that  intelligent  appreciation  of  the 
situation  and  the  policies  proposed  to  insure 
effective  response  to  the  leadership.  For 
clearly  our  reconstruction  period  cannot  pro- 
duce the  best  results  if  it  is  left  to  the  brilliant 
performance  of  a  few  conspicuous  leaders;  it 
must  be  a  nation-wide  popular  collaboration. 

Times  of  transition  are  also  characterized  by 
the  fact  that  they  present  for  instant  and  lump 
payment  the  debt  that  the  injustice,  ignorance, 
blindness,  and  inefficiency  of  the  whole  preced- 
ing era  have  been  accumulating — a  debt  that 
in  normal  times  would  be  paid  piecemeal. 
This  is  of  fundamental  importance  to  remem- 
ber in  determining  one's  attitude  toward  the 
apparent  excess  of  waste  and  destruction  that 
frequently  marks  a  process  of  revolution  or  re- 
adjustment. Too  frequently  one  dead  man  in 
a  street  brawl  or  a  million  dollars  lost  in  the 
reordering  of  a  system  alone  determine  a  man's 
opposition  to  a  revolution  or  a  reform.  I  am 
not  building  a  case  for  Bolshevism's  experi- 
ment in  proletarian  autocracy;  I  am  saying 
only  that  the  costs  and  penalties  of  revolutions 
and  readjustments  are  sometimes  distressingly 
large  not  because  the  change  is  wrong,  but  be- 


32       THE  POLITICS  OF  INDUSTRY 

cause  the  concentrated  debts  of  the  passing  or- 
der are  being  paid  off.  When  revolutions  take 
place  on  the  instalment  plan,  as  they  are  al- 
ways doing,  we  don't  worry  about  their  incon- 
venience or  their  price;  but  when  evolution 
lets  bills  pile  up  and  calls  us  to  account,  we  de- 
mur. The  basic  question  to  ask  in  such  in- 
stances is,  Will  the  payment  of  the  lump  sum 
bring  a  compensating  degree  of  progress!  If 
so,  the  costs  of  change  may  represent  invest- 
ment rather  than  loss. 

Times  of  readjustment  like  this  always  tempt 
the  current  generation  to  draw  up  a  program 
for  human  destiny  and  take  immediate  steps  to 
carry  it  out.  Men  who  are  most  creative  for 
their  own  generation  too  frequently  contradict 
themselves  by  trying  to  crystallize  their  no- 
tions for  the  next  generation.  Much  of  the 
popular  criticism  of  great  foundations  has  cen- 
tered about  the  fact  that  they  may  easily  be- 
come retained  attorneys  for  dead  men's  poli- 
cies. We  cannot,  of  course,  get  on  upon  any 
such  basis.  We  must  not  limit  the  freedom — 
or,  I  should  say,  hamper  the  freedom — of  the 
next  generation  to  experiment  with  life.  We 
must  not  will  our  children  a  rigid  world  that 
nothing  but  war  or  revolution  will  alter;  we 


EECONSTEUCTION  33 

have  had  enough  experience  with  that  kind  of 
world.  The  greatest  inheritance  we  can  hand 
down  to  the  next  generation  is  not  an  improved 
world,  but  a  world  in  which  improvement  is 
daily  possible.  Every  scheme  of  government 
or  industry  that  may  be  proposed  during  our 
readjustment  period  should  be  carefully  scru- 
tinized in  the  light  of  this  essential  requirement 
of  consistent  progress. 

Some  one  has  said  that  in  every  time  of  fun- 
damental readjustment  the  partitions  of  life 
are  torn  out  and  the  specialists  confounded. 
Just  that  is  happening  to-day,  and  one  of  the 
big  results  that  will  come  from  it  will  be  the 
widening  of  the  range  of  the  average  man's  in- 
terests. By  strange  paradox,  \\ihen  specialized 
knowledge  will  be  at  a  premium,  no  man  with 
large  directive  responsibilities  will  dare  be  too 
purely  a  specialist.  The  war  has  emphasized 
to  the  American  mind  the  relatedness  of  things. 
It  is  clearer  than  ever  that  the  business  man 
of  the  future  must  be  more  than  a  business  man 
in  the  conventional  sense  of  the  word :  he  must 
be  something  of  a  sociologist,  or  his  bungling 
with  labor  may  undo  him ;  he  must  have  at  least 
a  bowing  acquaintance  with  science,  or  he  may 
fall  a  victim  to  the  rule-of-thumb  and  be  bested 


34      THE  POLITICS  OF  INDUSTRY 

in  the  race  with  the  European  who  is  effecting 
a  closer  and  closer  alliance  between  science  and 
industry;  he  must  know  something  of  interna- 
tional politics,  or  he  may  find  his  far-flung 
scheme  of  investment  or  credit  go  on  the  rocks 
because  some  intangible  aspiration  of  the  na- 
tives of  an  African  colony  was  left  out  of  his 
reckoning.  The  educator  must  be  more  than 
a  teacher  of  accumulated  knowledge:  he  must 
be  keenly  alive  to  the  character  and  demands 
of  his  time ;  for  to-day  the  street  cuts  squarely 
across  the  campus,  the  class-room  opens  into 
the  market-place,  and  the  slum  is  next  door  to 
the  seminar.  The  world  is  the  educator's  mar- 
ket, his  graduates  are  his  goods;  he  must  ad- 
just his  goods  to  his  market.  The  university 
is  an  anachronism  that  puts  its  graduates  into 
the  modern  world  with  the  information  and  out- 
look of  the  medieval  world.  The  doctor  must 
clearly  be  more  than  a  doctor;  he  must  know 
his  city  as  few  men  know  it,  for  he  will  be  in- 
creasingly adjudged  as  failing  in  his  function 
unless  his  practice  is  an  integral  part  of  a  con- 
tinuous collaboration  with  the  sanitarian,  the 
architect,  the  parent,  the  teacher,  and  the  mu- 
nicipal government.  Self-interest  alone  will 
prompt  the  man  of  this  generation  to  become 


RECONSTRUCTION  35 

more  of  a  student  of  the  whole  range  of  public 
affairs  in  order  that  he  may  fit  his  own  work 
more  smoothly  into  the  total  social  process,  and 
the  work  that  is  not  thus  fitted  will  carry  a  han- 
dicap even  in  the  matter  of  material  success. 

One  of  the  serious,  but  avoidable,  wastes  of 
a  period  of  transition  to  a  new  order  is  that  in- 
volved in  the  transfer  of  leadership  into  new 
hands.  What  I  mean  concretely  is  this:  the 
men  who  are  to-day  in  the  positions  of  author- 
ity throughout  our  society,  the  men  whose 
hands  are  on  the  levers  of  power  in  business,  in 
industry,  in  education,  in  the  church,  are  the 
logical  candidates  for  the  leadership  of  the  new 
world  into  which  we  are  moving.  Whether 
they  represent  in  their  points  of  view  the  newer 
aspirations  and  determinations  of  our  time  is 
another  question,  but  they  are  the  men  best 
trained  in  the  mechanics  of  leadership;  they 
know  the  machinery  of  American  life  as  the 
rest  of  us  do  not.  Other  things  being  equal, 
their  whole  life  has  been  a  training  for  the  re- 
sponsibilities of  this  day.  Their  fruits  of  ex- 
perience society  can  ill  afford  to  lose.  But  this 
is  certain:  if  these  present  leaders  of  Ameri-i 
can  life  either  fail  or  refuse  to  recognize  the  le- 
gitimate new  demands  of  this  time  of  revalua- 


36       THE  POLITICS  OF  INDUSTRY 

tion,  if  they  conceive  their  task  to  be  the  de- 
fense of  the  past  rather  than  the  guidance  of 
the  future,  if  they  spend  their  energies  in  the 
thankless  task  of  heckling  progress,  the  leader- 
ship of  American  life  will  inevitably  pass  into 
green  hands — the  hands  of  men  who  more  faith- 
fully voice  the  will  of  the  American  people,  al- 
though they  lack  adequate  training  for  leader- 
ship. This  is  not  conjecture.  Whenever,  in 
those  creative  moments  in  history  when  the  ac- 
customed calm  and  conservatism  of  the  popu- 
lar mind  has  been  broken  up,  society  has  had 
to  choose  between  trained  blind  men  and  un- 
trained men  of  vision,  society  has  chosen  the 
untrained  men  of  vision.  And  the  instinct  of 
society  has  been  right.  The  leader  whose  vi- 
sion is  right  and  whose  purpose  is  sincere  will 
acquire  the  training  in  time,  while  the  trained 
man  who  persists  in  clinging  to  the  passing  or- 
der is  a  dead  weight.  But  there  is  no  final  rea- 
son why  the  trained  leadership  of  one  period 
of  development  should  not  become  the  fittest 
servant  of  the  next  period.  Hardly  a  day 
passes  now  without  some  glimmerings  of  hope 
in  that  direction.  Of  course  a  certain  propor- 
tion of  the  surprising  liberalism  expressed 
.from  hitherto  ultra-conservative  quarters  is  in- 


RECONSTEUCTION  37 

spired  by  the  Bismarckian  policy  of  defeating 
reform  by  annexing  it,  but  in  a  swiftly  moving 
time  like  this  even  that  is  a  subtly  educative 
process,  which  will  leave  its  mark  upon  the 
mind  that  goes  through  it.  What  a  heartening 
thing  it  would  be  to  see  some  capitalist  forget 
himself  into  immortality  by  conceiving  and  pro- 
posing the  most  just  and  workable  solution  for 
the  labor  problem!  And  some  business  man 
who  approaches  the  restless  aspirations  of  the 
next  few  years  in  a  spirit  of  inquiry,  of  sympa- 
thy and  of  disinterested  public  service  instead 
of  automatic  antagonism  may  do  just  that 
thing.  Back  in  our  muck-raking  period  many 
fine-spirited  men  broke  under  the  exposure,  be- 
came prematurely  old  men  under  the  grilling, 
and  passed  out  of  public  life  shamed  and  dis- 
appointed men.  A  hardened  reporter,  not 
given  to  sentiment,  in  telling  me  of  one  of  these 
men  said  that  he  died  of  a  broken  heart.  Now, 
few  of  these  men  were  personally  bad  men; 
many  were  good  men,  who  were  carrying  the 
business  and  political  ethics  of  a  dead  day  over 
into  a  day  of  new  and  different  standards. 
They  had  stuck  too  closely  to  their  political  and 
business  jobs  and  had  failed  to  keep  sensitive 
to  the  growing  ideals  of  their  time.  Society  in 


38      THE  POLITICS  OF  INDUSTRY 

its  development  moved  past  them  without  their 
knowing  it,  and  that  fact  left  society  no  choice 
but  to  scrap  their  leadership.  I  have  taken  the 
time  to  pick  up  this  bit  of  history  because  our 
leaders  face  a  similar  situation  to-day.  The 
key-word  of  political  and  business  criticism  in 
the  years  immediately  ahead  will  not  be  "cor- 
ruption," as  it  was  in  the  muck-raking  period. 
But  the  man  who  fails  to  adjust  himself  to  the 
spirit  and  standards  of  this  time  will  be  as 
ruthlessly  scrapped  as  were  the  leaders  of  that 
period. 

Finally,  a  time  of  transition  makes  impera- 
tive the  possession  of  a  unified  national  policy 
that  will  knit  the  scattered  energies  and  diver- 
gent purposes  of  a  people  into  effective  unity 
of  action.  Without  such  national  purpose  or 
policy,  the  varied  internal  antagonisms  of  a  na- 
tion cancel  and  neutralize  one  another  and 
bring  the  society  to  a  state  of  rest.  And  it  is 
at  just  that  point  that  a  society  can  be  caught 
in  the  sweep  of  invisible  world  currents  and 
carried  into  situations  neither  of  its  choosing 
nor  its  expectation.  I  am  here  trying  to  state 
from  memory  and  apply  to  our  present  prob- 
lem the  thesis  which  L.  P.  Jacks  developed  in 
his  illuminating  essay  on  "A  Drifting  Civiliza- 


EECONSTRUCTION  39 

tion."  American  society  does  not  want  to  be- 
come the  inert  plaything  of  invisible  currents, 
whether  they  be  currents  of  Bolshevism  or  im- 
perialism. The  achievement  of  a  few  definite, 
large,  inspiring,  and  unified  national  purposes 
is  the  best  or,  more  accurately,  the  only  insur- 
ance against  such  loss  of  the  control  of  our  fu- 
ture. A  nation  without  such  integrating  pur- 
pose or  purposes  is  always  easy  prey  for  the 
demagogue  or  the  strong  man  who  knows  what 
he  wants.  Of  course,  the  difficulty  we  face  in 
the  United  States  is  that  ours  is  such  a 
sprawled-out  country  that  concentrated  atten- 
tion is  but  rarely  paid  to  anything  that  states- 
manship says.  We  listen  by  sections,  and  us- 
ually by  the  time  the  necessary  unity  of  opinion 
has  been  secured  the  ripe  hour  for  action  has 
passed,  so  that  we  lose  half  the  value  of  the  act. 
Maybe  some  advertising  genius  will  arise  who 
can  teach  us  how  to  get  at  the  mind  of  this 
whole  people  with  political  and  industrial  poli- 
cies at  least  as  effectively  as  it  is  got  at  with  the 
name  of  a  chewing-gum  or  an  automobile.  He 
would  deserve  well  of  the  country  were  he  to  ap- 
pear for  service  during  the  next  few  important 
years. 
Here,  then,  are  seven  things  which  charac- 


40      THE  POLITICS  OF  INDUSTRY 

terize  times  of  readjustment  and  revaluation 
like  the  one  through  which  we  are  now  passing 
and  shall  be  passing  for  several  years  to  come : 
(1)  The  possibility  of  speeding  up  evolution 
and  accomplishing  in  a  few  years  what  in  nor- 
mal times  might  take  a  century;  (2)  a  dra- 
matization of  the  necessity  for  the  conscious 
control  and  direction  of  civilization  and  an 
exposure  of  the  high  social  cost  of  drift; 
(3)  the  burdensome  necessity  for  paying  off 
the  accumulated  debts  of  the  old  order  that 
is  passing;  (4)  a  temptation  to  the  living  to 
draw  up  a  dogmatic  program  for  the  next  gen- 
eration; (5)  a  tearing  down  of  the  partitions 
that  normally  separate  the  various  interests 
and  classes  of  society;  (6)  a  waste  of  skill  and 
experience  in  the  transfer  of  leadership  into 
new  hands ;  and  (7)  an  emphasis  upon  the  need 
for  a  unified  national  policy.  The  implications 
of  these  seven  aspects  of  this  time  of  readjust- 
ment will  touch  intimately  every  problem  and 
interest  of  the  financial  district,  of  the  factory, 
of  the  university,  of  the  church,  of  every  insti- 
tution of  American  life.  No  calculation  will  be 
complete  that  leaves  them  out  of  account. 

I  am  under  no  delusion  that  in  this  paper  I 
have  sketched  an  adequate  picture  of  this  time 


EECONSTEUCTION  41 

of  transition.  I  have  not  attempted  to  do  the 
impossible — to  make  a  complete  catalogue  of 
the  forces  and  factors  that  must  be  reckoned 
with  in  determining  American  policies.  I  have 
conceived  this  paper  as  more  in  the  nature  of 
a  foot-note  to  the  discontent  and  mobility  of 
our  time.  If  it  gives  the  reader  the  sense  of 
movement,  of  flexibility,  of  questioning  that 
gives  this  time  its  character,  if  it  dramatizes 
the  equal  danger  latent  in  ultra-conservatism 
and  ultra-radicalism,  if  it  indicates  the  wisdom 
of  making  the  forces  of  change  and  the  forces 
of  conservatism  complementary  instead  of  com- 
petitive purely,  the  paper  will  more  than  serve 
its  purpose. 

It  is  not  too  much  to  say  that  everything  de- 
pends upon  the  attitude  which  the  present  lead- 
ers of  American  life  take  toward  the  new  forces 
that  are  now  moving  across  the  face  of  the 
world,  not  to  leave  untouched  the  last  corner  of 
our  own  country.  Until  it  becomes  clear  what 
that  attitude  is  to  be,  it  is  difficult  to  say  which 
is  the  more  important  undertaking — the  edu- 
cation of  the  leaders  of  the  social  revolution 
or  the  education  of  the  captains  of  industry. 


Ill 

ANONYMOUS   LIBERALISM 

The  statesman's  General  Staff — The  new  spirit  in  business — 
Professions  vs.  Trade — The  intellectual  challenge  of  modern 
business — The  social  function  of  the  business  man — Henry 
Ford's  peace  ship  vs.  Henry  Ford's  farm  tractor — Efficient 
production — Just  distribution — Wise  consumption — Trade 
ethics — Business  leadership  and  the  social  unrest — The 
menace  of  the  firing-squad  mind — Twenty  business  men  and 
a  Magna  Charta  for  American  industry. 

THE  war  meant  for  American  business 
quick  and  fundamental  readjustments  in 
those  processes  of  production,  distribution,  and 
consumption  upon  which  civil  and  military 
strength  rest.  To  an  unprecedented  degree, 
private  interests  were  adjourned,  and  the  pro- 
cesses of  business  reassessed  in  terms  of  public 
service.  For  the  time  our  factories  and  stores 
were  looked  upon  less  as  distinct  businesses, 
conducted  for  private  ends,  and  more  as  coor- 
dinate parts  of  a  national  machinery  for  pro- 
duction and  distribution.  The  spirit  of  com- 
mon enterprise  which  the  urgency  of  war 
evoked  made  possible  many  forward-looking 

42 


ANONYMOUS  LIBERALISM          43 

things  that  in  normal  circumstances  would  have 
required  a  decade  of  agitation  and  split  the  na- 
tion into  camps  of  competitive  opinion. 

This  necessity  for  common  action  has  not 
ceased  with  the  ending  of  the  war.  The  re- 
quirements of  progress,  no  less  than  the  re- 
quirements of  war,  demand  a  mobilization  of 
the  spirit  of  unity,  cooperation,  and  concentra- 
tion. Without  unity,  cooperation,  and  concen- 
tration as  a  basis  of  action,  the  policies  of  the 
immediate  future,  at  least,  will  be  the  outcome 
of  log-rolling  compromise,  a  patchwork  of  re- 
luctant concessions  from  conflicting  interests. 
Quite  clearly  we  shall  not  obtain  this  unity,  co- 
operation and  concentration  by  the  methods  of 
governmental  control  that  obtained  during  the 
war,  for  the  general  tendency  will  be  from  con- 
trol to  freedom  the  farther  we  get  from  the  sit- 
uation of  emergency.  This  brings  to  the  fore, 
as  a  question  of  national  interest,  the  spirit  and 
purpose  which  we  may  expect  the  leaders  of 
American  business  and  industry  to  bring  to 
the  issues  of  readjustment  and  development 
within  the  next  few  years.  The  outlook  for 
fundamental  progress  cannot  be  predicated 
upon  the  breadth  or  narrowness  of  political 
leadership  alone;  the  breadth  or  narrowness 


44       THE  POLITICS  OF  INDUSTRY 

of  leadership  in  business  and  industry  is  an 
equally  important  factor  in  any  such  reckoning. 
A  few  determined  political  leaders  with  vision 
and  strategy,  supported  by  the  degree  of  lib- 
eralism that  exists  in  the  national  mind,  will 
doubtless  be  able  to  swing  the  nation  with  them 
in  the  effecting  of  the  clearly  essential  read- 
justments in  our  domestic  policies ;  but  we  shall 
not,  as  a  people,  take  full  advantage  of  the  pe- 
culiar possibilities  of  progress  that  inhere  in 
a  period  of  readjustment  unless  all  of  the  pro- 
cesses of  our  common  life,  particularly  those  of 
business  and  industry,  are  guided  by  broadly 
conceived  reconstructive  policies,  unless  every 
man  who  holds  a  position  of  leadership  in  our 
social,  industrial,  and  business  life  plays  a 
courageous  and  creative  part.  The  statesman, 
the  prophet,  the  publicist,  the  leader  with  a  syn- 
thetic mind  who  sees  the  varied  factors  and 
forces  of  our  national  life  in  their  just  relations, 
will  be  invaluable  in  the  years  just  ahead;  but 
such  leadership  will  not  achieve  the  largest 
possible  results  without  intimate  collaboration 
with  constructive  leadership  in  the  fields  of 
production,  distribution,  and  consumption. 
The  statesman  will  be  hampered  in  his  leader- 
ship unless  the  manufacturer,  the  merchant,  the 


ANONYMOUS  LIBERALISM         45 

banker,  and  the  labor  leader  constitute  for  him 
a  sort  of  general  staff,  with  the  members  of 
which  he  can  establish  a  community  of  inter- 
est and  an  agreement  on  policy. 

For  these  reasons  it  becomes  necessary  to  be- 
gin a  study  of  the  probable  contribution  of  busi- 
ness to  the  period  of  readjustment  we  are 
passing  through  with  an  assessment  of  the  mo- 
tive forces  that  promise  to  determine  and  di- 
rect the  American  business  mind.  With  such 
an  assessment  made,  one  may  think  with  a 
greater  sense  of  sureness  upon  specific  prob- 
lems of  business  and  industry.  This  paper, 
therefore,  deals  with  standards  of  value,  points 
of  view,  and  motives  that  may  be  found  in  busi- 
ness circles,  partly  with  standards  and  mo- 
tives that  are  established  and  apparent,  but 
also  with  standards  and  motives  that  are  in  pro- 
cess of  formulation — standards  and  motives 
that  have  been  stimulated  by  the  circumstances 
and  demands  of  the  war. 

American  business  men  aspire  to  contribute 
to  the  processes  of  readjustment  and  revalua- 
tion more  than  mere  shrewdness.  American 
business  men  are  not  sentimentalists.  They 
have  not  turned  radical.  But  on  every  hand 
there  is  evidence  in  business  circles  of  a  tern- 


46      THE  POLITICS  OF  INDUSTRY 

pered  idealism  impatient  to  translate  itself  into 
the  concrete,  an  increasingly  high  sense  of  the 
function  business  may  perform  in  these  days 
that  challenge,  as  few  days  have  challenged, 
whatever  of  the  creative  there  may  be  in  a  man. 
During  the  war  men  everywhere  breathed  the 
ampler  air  of  service  to  causes  larger  than 
themselves  or  their  interests  alone,  and  what- 
ever their  early  post-war  reactions  may  be, 
these  men  will  not  long  breathe  easily  in  the 
stuffy  atmosphere  of  narrow  policies  and  purely 
self-seeking  methods.  I  am  under  no  illusion 
that  the  war  has  remade  human  nature.  I  am 
not  under  the  spell  of  analogy  to  the  extent  of 
thinking  that  the  spirit  of  dedication  to,  and 
sacrifice  for,  large  common  causes  will  be  car- 
ried over  undiminished  into  the  period  of  peace. 
We  are  doubtless  in  for  a  good  round  measure 
of  reaction.  Men  will  want  to  shake  off  arbi- 
trary restrictions  that  war  imposed.  There 
will  be  on  all  hands  pleas  for  a  renaissance  of 
individualism ;  but  I  am  sanguine  enough  to  be- 
lieve that  this  will  be  temporary — temporary 
not  because  the  war  has  worked  any  miracle 
of  transformation  in  the  mind  of  the  race,  but 
because  the  whole  temper  of  the  times  will  cry 


ANONYMOUS  LIBERALISM         47 

out  against  it;  temporary  because  even  before 
the  war  an  enlarging  sense  of  its  social  func- 
tion was  getting  hold  of  the  business  mind. 

For  several  years  now,  years  during  which 
we  have  been  consolidating  the  social  gains 
from  our  muck-raking  period,  there  has  been 
going  on  in  the  American  business  mind  a  move- 
ment almost  mystical  in  its  essential  quality 
and  yet  of  the  profoundest  practicality.  This 
movement,  which  I  want  to  discuss  in  detail  a 
bit  later,  the  facile  criticism  of  the  radical  mind 
has  frequently  discounted  and  dismissed  with 
a  sort  of  can-any-good-come-out-of-Nazareth 
air.  But  these  subtle  alterations  of  mind  and 
attitude,  however  unsatisfying  to  the  type  of 
mind  that  would  rather  play  with  a  perfect  the- 
ory than  improve  an  imperfect  world,  consti- 
tute one  of  the  important  sets  of  operating  in- 
fluences with  which  we  shall  find  ourselves  deal- 
ing in  the  fresh  ordering  of  our  immediate  fu- 
ture in  this  country.  It  is  a  commonplace  that 
every  such  time  of  democratic  advance  as 
we  are  now  passing  through  means  the  release 
and  accentuation  of  certain  fundamental  hu- 
man qualities.  I  am  here  listing  as  a  product 
of  the  current  purpose  to  humanize  more  fully 


48      THE  POLITICS  OF  INDUSTRY 

business,  industry,  education,  and  politics  what 
for  want  of  better  phrasing  I  may  call  the  new 
spirit  in  business. 

I  can  perhaps  describe  this  new  spirit  no  bet- 
ter than  by  saying  that  American  business  has 
been  gradually  evolving  from  a  trade  into  a 
profession.  In  our  minds  at  least  there  has 
existed  a  definitive  difference  between  a  trade 
and  a  profession.  Until  recently  we  went  about 
a  classification  of  occupations  somewhat  as 
follows :  drawing  a  line  down  the  center  of  the 
page,  we  wrote  the  word  " professions"  at  the 
top  of  the  right-hand  column  and  listed  there- 
under such  undertakings  as  the  law,  medicine, 
teaching,  the  ministry,  journalism — all  of  the 
so-called  professions;  at  the  top  of  the  left- 
hand  column  we  wrote  the  words  " business" 
and  "labor"  as  blanket  designations  of  all  re- 
maining undertakings  of  which  the  controlling 
motive  seemed  to  be  the  money  that  could  be 
made  out  of  them.  Between  business  and  la- 
bor on  the  one  hand  and  the  professions  on 
the  other  a  great  gulf  was  fixed — a  gulf  as  sun- 
dering as  the  gulf  that  separated  Dives  and  La- 
zarus. 

This  gulf  was  the  product  of  a  certain  uncrit- 


ANONYMOUS  LIBERALISM         49 

ical  assumption  that  men  enter  the  professions 
not  primarily  because  of  the  money  that  can  be 
made  out  of  them,  but  because,  in  addition  to 
a  competence  and  some  measure  of  surplus, 
professions  give  men  automatic  and  accredited 
rank  as  public  servants  ministering  to  the 
higher  needs  of  the  society  of  which  they  are 
members.  Business  and  labor,  however,  have 
not  commonly  come  within  the  radius  of  that 
assumption.  For  years  we  have  held  in  the 
back  of  our  minds  a  conception  of  business  and 
industry  as  an  unregenerate  section  of  our  so- 
cial order  in  which  the  law  of  tooth  and  nail 
applied  of  necessity.  Whenever  some  one  re- 
ferred to  a  business  man  as  being  a  public  ser- 
vant or  benefactor,  the  picture  that  came  invol- 
untarily to  mind  was  that  of  a  man  who  in  his 
early  and  poor  youth  had  plunged  into  busi- 
ness, where  by  dint  of  exacting  effort  and  ruth- 
less concentration  upon  purely  material  ends 
he  had  accumulated  a  lot  of  money,  and,  when 
getting  old  and  a  trifle  weary  of  the  grind,  had 
turned  himself  into  a  sort  of  glorified  Santa 
Glaus  to  society,  giving  his  money  away  to  all 
sorts  of  "good"  causes.  For  years  no  one 
worried  greatly  about  the  sources  of  such  bene- 
factions, it  seeming  to  be  the  assumption  that 


50      THE  POLITICS  OF  INDUSTEY 

the  fact  that  a  man  did  good  with  his  money 
after  he  got  it  disinfected  the  methods  of  ac- 
quisition, if  the  methods  needed  disinfection. 

All  that  is  changing,  is  indeed  changed,  and 
not  because  any  superconscienee  has  evolved  a 
theory  of  tainted  money,  but  because  also,  and 
perhaps  mainly,  business  men  have  come  to  be- 
lieve that  a  business  man's  most  important  op- 
portunity to  serve  society  comes  not  after  he 
has  made  his  money,  in  giving  it  away,  but  ra- 
ther while  he  is  making  his  money,  in  the  way 
he  makes  it.  Statesmanship  in  business  has 
come  to  be  adjudged  worthier  of  a  real  man's 
mettle  than  philanthropy  outside  business. 
A  business  man's  public  service  is  seen  to  con- 
sist not  so  much  in  a  number  of  benevolent 
chores  taken  on  after  office  hours  as  in  the  way 
the  business  of  the  world  is  carried  on  during 
office  hours.  In  other  words,  business  is  tak- 
ing on  the  character  of  a  profession.  It  has  al- 
ways been  true  that  the  social  significance  of 
business  equals  if  not  exceeds  the  social  signifi- 
cance of  any  of  the  accredited  professions  sim- 
ply because  business  occupies  more  of  the  hours 
of  the  average  man 's  day  and  touches  life  daily 
at  more  points  than  all  other  social  processes 
combined. 


ANONYMOUS  LIBERALISM          51 

John  Buskin  caught  this  significance  years 
ago  when  he  wrote,  in  his  essay  on  "The  Roots 
of  Honour,"  this  statement,  which  has  been 
quoted  threadbare,  but  which  is  still  valid  and 
still  merits  attention.  Ruskin  said,  with  refer- 
ence to  the  merchant,  a  term  that  he  uses  to  re- 
fer to  all  who  engage  in  any  form  of  industrial 
pursuit : 

The  fact  is  that  people  never  have  had  clearly  ex- 
plained to  them  the  true  functions  of  a  merchant  with 
respect  to  other  people.  .  .  .  Five  great  intellectual 
professions,  relating  to  daily  necessities  of  life,  have 
hitherto  existed — three  exist  necessarily,  in  every 
civilized  nation: 

The  Soldier's  profession  is  to  defend  it. 

The  Pastor's,  to  teach  it. 

The  Physician's,  to  keep  it  in  health. 

The  Lawyer's,  to  enforce  justice  in  it. 

The  Merchant's,  to  provide  for  it. 
And  the  duty  of  all  these  men  is,  on  due  occasion,  to 
die  for  it.    On  due  occasion,  namely: 

The  Soldier,  rather  than  leave  his  post  in  battle. 

The  Physician,  rather  than  leave  his  post  in  plague. 

The  Pastor,  rather  than  teach  falsehood. 

The  Lawyer,  rather  than  countenance  injustice. 

The  Merchant — What  is  his  "due  occasion"   of 

death? 

It  is  the  main  question  for  the  merchant,  as  for  all  of 
us.  For,  truly,  the  man  who  does  not  know  when  to 
die,  does  not  know  how  to  live. 


52      THE  POLITICS  OF  INDUSTRY 

In  even  more  pointed  fashion,  the  profes- 
sional implications  of  business  have  been  stated 
by  the  late  Professor  William  Smart  of  Glas- 
gow, who  was  an  employer  of  men  as  well  as  a 
teacher  of  economics.  In  his  very  stimulating 
volume,  called  "Second  Thoughts  of  an  Econo- 
mist, "  he  said: 

Personally  I  count  it  [the  employer's  function] 
the  noblest  profession  of  all,  though,  as  a  rule,  it  is 
taken  up  from  anything  but  the  noblest  motives ;  and 
what  I  ask  is — just  this  and  no  more — that  the  tradi- 
tions of  the  professions  be  transferred  to  it — the 
noblesse  oblige  of  living  for  their  work  and,  if  neces- 
sary, dying  for  it.  If  an  employer  has  any  faith  in 
the  well  worn  analogy  of  an  "army  of  industry"  he 
must  believe  in  the  necessity  of  Captains  of  Industry, 
who  think  first  of  their  country  and  their  men,  and 
only  second  of  their  pay.  .  .  .  He  must  take  the  sins 
of  his  order  upon  himself  and  win  back  the  confi- 
dence that  meanwhile  has  disappeared.  His  task  to- 
day, in  fact,  is  very  much  that  of  a  philosopher-king 
who  comes  to  his  throne  after  many  years  of  misrule 
by  his  predecessors.  He  has  no  right  to  his  honor- 
able position  but  that  he  governs  divinely. 

Since  Euskin  and  Smart  said  these  things, 
progress  has  in  a  measure  at  least  answered 
their  pleas.  The  traditions  of  the  professions 
are  at  least  in  process  of  transfer  to  business. 


ANONYMOUS  LIBERALISM         53 

In  saying  this,  I  am  neither  falling  victim  to  a 
merely  pretty  sentiment  nor  confusing  fact 
with  desire.  Of  course  one  runs  the  constant 
risk  of  failure  to  distinguish  between  a  private 
wish  and  a  public  movement,  as  George  Ber- 
nard Shaw  has  suggested;  but  I  am  trying  in 
this  paper  to  keep  well  within  the  radius  of  the 
findings  of  experience.  I  am  basing  my  asser- 
tions regarding  the  professional  tendencies  in 
business  upon  things  I  have  seen  and  heard  in 
banks  and  stores  and  factories,  fully  aware, 
however,  that  I  am  reporting  a  situation  that 
exists  among  the  creative  few  rather  than 
among  the  routine  many  of  business  men.  But 
these  creative-minded  business  men  who  envi- 
sion their  business  in  its  social  relations  are  on 
the  increase;  they  are  the  pioneers  of  a  new 
business  order.  They  are  among  the  most  pre- 
cious possessions  of  a  democracy  of  liberal  in- 
tentions, for  the  tempered  liberalism  of  one  man 
whose  hands  are  on  levers  of  power  may  ac- 
complish more  essential  progress  than  the  more 
vocal  and  more  clearly  labeled  liberalism  of 
academic  circles.  In  other  words,  there  is  an 
anonymous  liberalism  that  frequently  does  the 
thing  for  which  professional  liberalism  has  set 
the  stage.  This  is  no  cheap  fling  at  the  theo- 


54      THE  POLITICS  OF  INDUSTRY 

rist,  who  is,  after  all,  the  most  practical  man 
alive,  the  man  who  blazes  the  trails  that  re- 
sponsible executives  later  travel.  This  is  sim- 
ply a  reminder  that  the  cautious  liberalism  of 
the  forward-looking  business  man  and  the  more 
daring  liberalism  of  theory  are  complementary 
rather  than  competitive. 

But,  to  get  to  more  detailed  statement  re- 
specting the  professional  tendencies  in  busi- 
ness, most  of  the  discussions  of  this  matter  sug- 
gest the  peculiar  characteristics  of  a  profes- 
sion, as  contrasted  with  other  occupations,  as 
being  these : 

First,  a  professional  career  requires  a  pre- 
liminary attainment  of  knowledge,  and  in  some 
measure  of  learning,  as  distinguished  from  the 
mere  skill  that  comes  from  administrative  ex- 
perience. 

Second,  a  professional  career  implies  a  sense 
of  public  function  looking  toward  the  accom- 
plishment of  certain  social  objectives  as  the 
final  justification  of  any  claim  to  public  respect 
and  support. 

Third,  a  professional  career  involves  adher- 
ence to  a  code  of  professional  ethics. 

These  three  things  constitute  the  popular, 
though  perhaps  highly  theoretical,  conception 


ANONYMOUS  LIBERALISM          55 

of  the  recognized  professions,  such  as  the  law, 
medicine,  teaching,  the  ministry,  journalism, 
and  the  like.  Here  and  there  throughout  the 
United  States  I  have  seen  these  three  charac- 
teristics of  a  profession  happily  illustrated  in 
highly  successful  businesses  worthily  adminis- 
tered. I  want  now  to  suggest  how  these  pro- 
fessional standards  may  become,  are  indeed  be- 
coming, characteristic  of  American  business 
in  its  finer  forms  of  expression.  In  doing  this 
I  shall  do  little  more  than  report  what  I  have 
heard  outstanding  leaders  in  American  busi- 
ness and  industry  say  in  those  self-revealing 
moments  when  men  are  off  guard  and  express- 
ing their  real  selves.  Some  one  will  say,  of 
course,  that  it  is  not  the  club-corner  conversa- 
tions of  captains  of  industry  in  an  expansive 
after-dinner  mood  that  give  us  an  insight  into 
the  amount  of  anonymous  liberalism  that  we 
may  even  tentatively  reckon  upon  coming  into 
play  during  our  readjustment  period ;  that  the 
only  dependable  basis  for  such  reckoning  is  the 
actual  policies  that  have  been  and  are  under 
way  in  business  and  industry.  Such  sayings 
seem  to  me  to  spring  from  the  most  short- 
sighted of  social  analysis.  A  vast  amount  of 
reasonable  progress  has  been  checked  by  just 


56      THE  POLITICS  OP  INDUSTRY 

such  blindness  and  cynicism  toward  the  hesi- 
tant beginnings  of  new  points  of  view  in  quar- 
ters where  they  are  least  expected.  The  pres- 
ent expansion  in  the  business  man's  conception 
of  the  larger  social  implications  of  business  is 
one  of  those  quiet  works  of  the  mind  that  have 
always  preceded  and  must  always  precede  the 
silent  revolutions  that  lay  most  of  the  mile- 
stones of  genuine  progress.  In  an  article  on 
"Reconstruction"  in  "The  Round  Table"  for 
September,  1916,  Alfred  E.  Zimmern  put  this 
fact  clearly  when  he  said: 

"We  have  always  realized  that  outward  changes  are 
of  no  avail  unless  men's  minds  have  been  prepared 
beforehand  to  profit  by  them.  We  know  that  new 
social  classes  cannot  be  created  in  a  moment  to  un- 
dertake the  new  tasks  which  may  be  ready  for  them. 
...  It  is  the  quiet  work  of  the  mind  that  makes  revo- 
lutions possible.  Without  a  change  of  outlook  all 
external  change  is  meaningless.  But  if  the  inner 
change  has  taken  place,  everything  is  possible,  even  the 
moving  of  mountains.  And  it  is  this  silent  Inner 
change  which  is  preparing  the  way  for  the  new  world 
after  the  war. 

Variations  of  judgment  as  to  its  essential 
character  and  significance  aside,  the  fact  re- 
mains that  a  changing  point  of  view  in  so  stra- 
tegic a  class  as  that  of  business  men  is  a  real 


ANONYMOUS  LIBERALISM         57 

factor  to  be  reckoned  with  in  any  attempt 
to  assess  the  probabilities  of  future  policy  or 
progress.  And,  as  a  basis  for  forecasting  the 
probable  character  of  future  business  policies 
in  this  country,  there  is  more  significance  in  the 
discovery  of  the  tender  shoots  of  a  finer  point 
of  view  scattered  about  in  a  thousand  and  one 
places  of  power  than  to  know  of  a  few  factories 
and  stores  in  which  the  newer  ideals  of  busi- 
ness have  been  worked  out  in  fair  fullness.  It 
is  always  heartening  to  find  brilliant  exceptions, 
but  doubly  heartening  to  find  the  contagion  of 
these  brilliant  exceptions  beginning  to  spread. 
It  would  be  easy  to  write  a  series  of  valuable 
papers  descriptive  of  particular  factories  and 
stores  in  which  business  men  with  professional 
ideals  have  demonstrated  with  dramatic  defi- 
niteness  the  practical  relation  between  profes- 
sional business  and  permanent  profit,  and  I 
hope  to  do  that  at  some  future  time ;  but  in  this 
particular  paper  I  am  more  concerned  to  em- 
phasize the  fact  that  the  ideals  of  such  ex- 
ceptional businesses  are  gaining  a  foothold 
throughout  American  business,  even  in  many 
quarters  where  the  tangible  evidence  is  not  yet 
apparent. 
Let  me  try,  then,  to  interpret  as  accurately 


as  I  may  the  opinions  of  certain  business  and 
industrial  leaders  of  America  with  whom  I 
have  discussed  the  way  busine'ss  and  industry 
should  and  may  assume  the  three  characteristics 
that  were  noted  a  few  paragraphs  back  as  dis- 
tinguishing a  profession. 

First,  it  is  evident  that  modern  business,  no 
less  than  the  time-honored  professions,  requires 
a  preliminary  attainment  of  knowledge,  and  in 
some  measure  of  learning,  as  distinguished 
from  the  mere  skill  that  comes  from  experience. 
Mr.  Justice  Brandeis,  in  an  address  at  Brown 
University  in  1912,  stated  clearly  the  basis  of 
such  an  assertion  as  this  when  he  said: 

The  field  of  knowledge  requisite  to  the  more  suc- 
cessful conduct  of  business  has  been  greatly  widened 
by  the  application  to  industry  not  only  of  chemical, 
mechanical,  and  electrical  science,  but  also  the  new 
science  of  management;  by  the  increasing  difficulties 
involved  in  adjusting  the  relations  of  labor  to  capital ; 
by  the  necessary  intertwining  of  social  with  industrial 
problems;  by  the  ever  extending  scope  of  state  and 
federal  regulation  of  business.  Indeed,  mere  size  and 
territorial  expansion  have  compelled  the  business  man 
to  enter  upon  new  and  broader  fields  of  knowledge  in 
order  to  match  his  achievements  with  his  opportuni- 
ties. This  new  development  is  tending  to  make  busi- 
ness an  applied  science. 


ANONYMOUS  LIBERALISM          59 

It  is  a  far  cry  from  the  simple  shops,  small- 
scale  production,  and  intimate  personal-appren- 
ticeship relation  between  men  and  masters  to 
the  present  great  stores  and  factories  which  in- 
volve in  their  administration  intelligent  coop- 
eration with  the  laboratories  of  science,  a  con- 
tinuous study  of  the  temper  and  fundamental 
aspirations  of  vast  armies  of  working-men 
whose  content  is  an  asset  and  whose  restless- 
ness is  a  liability,  a  knowledge  of  the  changing 
forces  that  from  time  to  time  determine  new 
adjustments  of  the  relation  of  business  to  gov- 
ernment, an  insight  into  the  currents  of  inter- 
national politics  that  react  upon  business  poli- 
cies and  profit,  an  understanding  of  local  cus- 
toms and  native  psychology  in  foreign  markets, 
and  the  thousand  and  one  things  that  go  into 
the  making  of  the  environment  in  which  the  pol- 
icy and  practice  of  a  given  business  must  op- 
erate. Few,  if  any,  of  the  recognized  profes- 
sions make  as  sweeping  challenge  to  the  intel- 
lectual ability  and  acquirements  of  a  man  as 
does  modern  business.  In  this  respect  at  least 
business  claims  fellowship  with  the  professions. 

Second,  it  is  clear  that  a  business  career,  if  it 
is  spaciously  conceived  and  made  permanently 
successful  under  present-day  conditions  and 


60      THE  POLITICS  OF  INDUSTRY 

ideals,  must  imply  a  sense  of  public  function  in 
the  business  man  that  holds  him  to  the  accom- 
plishment of  certain  social  objectives  as  the 
final  justification  of  any  claim  to  public  respect 
and  support.  The  all  too  prevalent  apostasy 
from  ideals  aside,  it  is  true  that  members  of  all 
the  recognized  professions  are  obligated  to  re- 
gard their  function  as  a  public  service  rather 
than  as  a  private  venture  alone.  Walter  Lipp- 
mann,  in  -a  brilliant  essay  in  his  ' '  Drift  and  Mas- 
tery," put  very  pointedly  the  instinctive  reac- 
tion of  the  public  against  non-business  classes 
who  show  a  blindness  to  their  social  responsi- 
bility, in  a  paragraph  that  reads : 

The  business  man  may  feel  that  the  scientist  con- 
tent with  a  modest  salary  is  an  improvident  ass.  But 
he  also  feels  some  sense  of  inferiority  in  the  scientist 's 
presence.  For  at  the  bottom  there  is  a  difference  of 
quality  in  their  lives — in  the  scientist's  a  dignity 
which  the  scramble  for  profit  can  never  assume.  The 
professions  may  be  shot  through  with  rigidity,  in- 
trigue, and  hypocrisy :  they  have,  nevertheless,  a  com- 
munity of  interest,  a  sense  of  craftsmanship,  and  a 
more  permanent  place  in  the  larger  reaches  of  the  im- 
agination. It  is  a  very  pervasive  and  subtle  differ- 
ence, but  sensitive  business  men  are  aware  of  it.  ... 
So  the  public  regards  a  professor  on  the  make  as  a 
charlatan,  a  doctor  on  the  make  as  a  quack,  ...  a 


ANONYMOUS  LIBERALISM         61 

politician  on  the  make  as  a  grafter,  a  writer  on  the 
make  as  a  hack,  a  preacher  on  the  make  as  a  hypocrite. 

I  have  quoted  Mr.  Lippmann  in  this  connec- 
tion both  because  he  states  the  social  responsi- 
bility of  the  professions  succinctly  and  because 
his  statement  gives  a  good  background  for  the 
special  emphasis  I  desire  to  place  upon  the  fact 
that  this  gap  between  the  ideals  of  the  profes- 
sions and  the  ideals  of  business  is  rapidly  nar- 
rowing. Every  day  the  conviction  among  busi- 
ness men  is  becoming  more  definite  that  the 
real  tone  and  temper  of  American  life  is  per- 
haps determined  more  fully  by  the  way  the 
work  of  the  nation  is  done  and  by  the  way  the 
business  of  the  nation  is  conducted  than  by  any 
other  single  set  of  factors.  As  I  have  said  be- 
fore, business  and  industry  largely  determine 
the  quality  of  our  common  life  simply  because 
the  primary  processes  of  production,  distribu- 
tion, and  consumption  touch  life  at  more  points 
and  oftener  than  all  other  social  processes  com- 
bined. Certainly  a  perversion  of  business  and 
industry  can  nullify  the  purpose  and  influence 
of  the  teacher,  the  writer,  the  physician,  the 
minister,  the  artist,  and  even  the  statesman. 
It  is  the  growing  recognition  of  this  fact  that  is 
prompting  a  larger  and  larger  number  of  busi- 


62      THE  POLITICS  OF  INDUSTKY 

ness  men  to  feel  that  business  is  more  than 
simply  an  instrument  with  which  the  business 
man  can  gain  the  personal  financial  freedom  to 
devote  an  increasing  part  of  his  time  to  disin- 
terested public  service,  that  business  is  in  itself 
a  field  of  public  service  that  makes  a  challeng- 
ing levy  upon  whatever  the  business  man  may 
have  of  statesmanship  and  public  spirit.  To 
put  this  matter  concretely,  the  relative  futility 
of  the  average  business  man's  "public  service" 
in  outside  activities  as  compared  with  the  op- 
portunities for  really  significant  statesmanship 
inside  his  business  finds  apt  illustration  in  a 
comparative  consideration  of  Henry  Ford's 
peace  ship  and  Henry  Ford's  farm  tractor. 
The  former  awakened  the  world's  humor,  the 
latter  the  world's  gratitude.  This  is  not  a  flip- 
pant criticism  of  Mr.  Ford's  peace  ship.  I 
should  rather  have  in  my  record  an  earnest, 
although  futile,  attempt  to  have  done  something 
toward  the  relief  of  the  tragic  circumstances  of 
the  war  than  the  calloused  indifference  which 
many  men  carried  through  a  time  when  civiliza- 
tion was  at  the  cross-roads,  and  no  one  could 
tell  which  direction  it  might  take.  This  is  sim- 
ply a  statement  of  fact,  that  by  an  act  of  inven- 
tion and  business  promotion,  Mr.  Ford,  in  pro- 


ANONYMOUS  LIBERALISM          63 

ducing  and  selling  his  farm  tractor,  is  laying  the 
foundation  for  a  revolution  upon  the  farms  of 
the  world,  the  implications  of  which  are  endless, 
not  alone  making  possible  an  increased  produc- 
tivity, with  all  that  means  in  the  forestalling 
of  food  shortage  and  the  consequent  removal  of 
one  of  the  fertile  sources  of  revolutionary  dis- 
content, but  also  making  possible  an  increase  in 
the  margin  of  leisure  for  the  farmer  and  his 
family,  which  is  essential  if  our  farms  are  to 
develop  men  as  well  as  acres. 

Mr.  Ford,  happily,  is  a  man  who  visualizes 
in  advance  the  full  round  of  social  implications 
involved  in  his  business  policies  and  acts,  and 
for  that  reason  he  is  able  to  find  in  business 
the  same  professional  satisfaction  that  Alexis 
Carrel  must  have  found  in  his  work  on  the  su- 
turing of  blood-vessels  and  the  transplantation 
of  human  organs  for  which  he  received  the 
Nobel  Prize  in  1912.  But  the  social  and  eco- 
nomic influence  of  the  farm  tractor  would  exist 
although  Mr.  Ford  were  blind  to  its  larger 
meaning.  For  that  reason  this  reference  to 
the  farm  tractor  illustrates  with  peculiar  di- 
rectness the  way  in  which  business  men  may, 
without  taking  to  the  pulpit  or  turning  re- 
former, affect  through  the  actual  processes  of 


64      THE  POLITICS  OF  INDUSTRY 

their  business  the  social,  intellectual,  moral, 
and  esthetic  quality  of  our  common  life. 

And  I  have  found  throughout  the  business 
life  of  America  men  in  whose  minds  something 
approaching  a  definite  philosophy  of  the  social 
function  of  business  is  taking  form.  Forward- 
looking  business  men  see  that  business,  in  addi- 
tion to  the  making  of  profit  and,  indeed,  in  or- 
der to  make  profit  permanently  under  the  con- 
ditions that  are  obtaining,  should  contribute 
toward  the  realization  of  three  large  ends  in 
American  life;  namely,  (1)  greater  efficiency 
in  the  production  of  wealth,  (2)  greater  justice 
in  the  distribution  of  wealth,  and  (3)  greater 
wisdom  in  the  consumption  of  wealth.  These 
are  social  objectives  which  business  men  will 
feel  increasingly  obligated  to  work  toward  as 
the  final  justification  of  their  claim  to  the  es- 
teem and  support  of  the  nation.  It  is  worth 
while  to  glance  at  these  three  objectives  in  pass- 
ing: 

In  the  first  place  it  is  clear  that  a  democracy 
cannot  endure  unless  the  average  man  in  it  is 
an  efficient  producer  of  wealth.  A  democracy 
rests  upon  uncertain  foundations  as  long  as  one 
element  of  the  population  plays  the  parasite  on 
the  productive  power  of  the  other  element  of 


ANONYMOUS  LIBERALISM         65 

the  population.  A  time  is  doubtless  coining 
when  we  shall  withhold  our  respect  from  the 
man  who  so  far  forgets  essential  justice  that 
he  claims  the  right  to  the  possession  of  wealth 
upon  any  other  ground  than  that  he  has  pro- 
duced it.  Those  who  are  in  possession  of 
wealth  upon  any  other  basis  are  doubtless  hold- 
ing it  upon  grounds  which  their  children's  chil- 
dren at  least  will  regard  not  only  as  unjust,  but 
as  fundamentally  immoral.  For,  however  dis- 
turbing to  our  complacency  it  may  be,  the  fact 
remains  that  vast  and  hitherto  inarticulate 
masses  in  every  country  are  now  thinking  and 
saying  that  the  only  justification  for  the  owner- 
ship of  wealth  is  the  production  of  wealth. 
This  of  course  does  not  mean,  except  to  the  rev- 
olutionary confiscator,  that  one  has  no  right  to 
the  private  ownership  of  a  dollar's  worth  of 
property  except  that  he  has  produced  in  return 
for  it  a  tangible  something  that  can  be  sold  on 
the  market  for  a  hundred  cents.  I  once  heard 
an  extremist  deliver  an  address  on  "American 
Parasites"  in  which  he  suggested  a  list  of  the 
classes  in  America  that  he  regarded  as  non-pro- 
ducers. In  this  list  he  included  clergymen,  con- 
cerning whom  he  said,  "We  are  through  with 
the  preacher  until  he  can  justify  himself  from 


66      THE  POLITICS  OF  INDUSTRY 

an  economic  standpoint. "  He  was  saying  in  ef- 
fect, "Let  's  deify  the  man  who  raises  the 
wheat  of  the  country,  but  let  's  damn  the  man 
who  raises  the  moral  standards  of  the  coun- 
try." It  is  quite  evident,  however,  that  the 
man  who  raises  the  moral  standards  of  a  com- 
munity is  as  truly  a  producer  of  wealth  as  the 
man  who  raises  the  wheat  of  a  community ;  that 
the  artist  who  adds  a  touch  of  beauty  to  a 
world  all  too  sordid  to  the  many,  or  the  thinker 
who  flings  one  creative  thought  against  the  sky 
of  the  future  is  as  truly  a  producer  of  wealth  as 
the  puddler  in  a  steel  plant.  It  is  nevertheless 
a  healthy  sign  that  men  everywhere  are  feeling 
more  and  more  that  one  has  no  right  to  the  pos- 
session of  wealth  unless  in  return  for  that 
wealth  he  has  helped  make  his  city,  his  state, 
and  his  nation  either  a  materially  richer,  a 
more  just,  a  more  intelligent,  a  more  beautiful, 
a  more  moral,  or  a  more  healthful  place  in 
which  he,  his  fellows,  and  future  generations 
can  live. 

In  the  second  place,  it  is  clear  that  although 
every  man  in  America  were  an  efficient  pro- 
ducer of  wealth,  the  development  and  stability 
of  a  genuine  democracy  would  remain  an  uncer- 
tain quantity  if  the  wealth  of  the  country  were 


ANONYMOUS  LIBERALISM          67 

not  distributed  justly.  No  society  can  reckon 
upon  stability  if  one  extreme  of  its  population 
consistently  gets  more  than  it  earns  and  the 
other  extreme  earns  more  than  it  gets.  We  are 
in  a  time  when  contagious  revolution  is  in  the 
air.  Glaring  injustice  in  the  distribution  of  a 
nation's  wealth  produces  just  so  much  inflam- 
mable material  to  feed  the  fires  of  revolt. 
Even  the  most  conservative  of  business  men 
are  reckoning  with  the  fact  that  progress 
toward  greater  justice  in  the  distribution  of 
wealth,  far  from  being  a  radical  measure,  is  an 
essential  element  of  that  sanely  conservative 
program  which  all  true  liberals  are  counting 
upon  to  insure  for  America  healthy  progress  in 
the  next  few  years  when  reckless  revolution 
will  plead  its  case  at  every  street  corner.  But 
aside  from  this  self-preservation  motive,  there 
is  more  in  the  cause  of  just  distribution  to  chal- 
lenge the  finer  impulses  of  a  business  man  than 
there  is  in  many  of  the  conventional  causes  to 
which  he  gives  his  time  and  money.  It  cer- 
tainly offers  a  bigger  challenge  than  does  char- 
ity. It  is  small  challenge  to  a  man's  genius  to 
respond  with  a  check  to  the  appeal  of  need. 
But  the  thing  that  makes  charity  unsatisfac- 
tory as  an  exclusive  expression  of  a  business 


man's  public  spirit  is  that  it  is  a  "time-and- 
again"  service;  it  is  a  job  that  can  never  be 
finished.  If  one  had  all  the  wealth  of  all  the 
multi-millionaires  of  the  United  States,  one 
could  doubtless  make  comfortable,  if  not  happy, 
all  the  poor  of  the  United  States ;  but  if  in  ad- 
dition to  such  benefaction  one  did  not  make  cer- 
tain fundamental  readjustments  in  the  social 
and  economic  structure  and  processes  of  Amer- 
ican life,  one  would  have  to  do  the  job  all  over 
again  when  the  present  poor  died  and  their 
children  came  on  the  stage.  Leonardo  da  Vinci 
would  probably  have  painted  "The  Last  Sup- 
per" with  little  enthusiasm  had  he  known  that 
with  the  last  stroke  of  his  brush  the  picture 
would  fade  from  the  canvas.  Yet  that  is  what 
happens  in  the  case  of  the  business  man  who 
is  indifferent  to  the  problem  of  the  just  distri- 
bution of  wealth  and  centers  all  of  his  out-of- 
office  interest  upon  charity.  The  just  distribu- 
tion of  wealth  is  a  "once-for-all"  service.  In 
almost  exact  proportion  to  the  nearness  of  our 
approach  to  perfect  justice  in  the  distribution 
of  wealth  will  the  number  of  our  disturbing 
social  and  industrial  problems  be  diminished. 
Injustice  in  the  distribution  of  wealth,  either 
real  or  fancied,  becomes  a  breeding-ground  for 


ANONYMOUS  LIBERALISM         69 

political,  social,  and  industrial  difficulties.  Re- 
move the  cause,  and  the  effect  will  disappear. 
Of  course  there  are  in  every  society  a  certain 
number  of  congenital  revolutionaries  with 
whom  revolt  is  a  major  sport;  they  would  or- 
ganize a  Red  Left  in  Utopia.  But  the  average 
American  is  at  heart  conservative  and  is  im- 
mune to  revolutionary  appeal  unless  actual 
conditions  give  some  measure  of  validity  to  the 
revolutionary  appeal.  The  conservative  busi- 
ness man  (I  use  the  word  " conservative"  in 
its  finer  sense,  not  as  equivalent  to  "reaction- 
ary") sees  that  constructive  effort  toward 
greater  justice  in  the  distribution  of  wealth  is  a 
challenge  to  real  public  service  in  that  it  will 
mean  essential  progress  for  society  and  at  the 
same  time  cut  the  ground  from  under  the  revo- 
lutionist. And,  after  all,  the  poor  of  America 
—  not  the  shiftless  poor,  but  the  involuntary 
poor  —  do  not  want  charity.  Given  justice, 
they  will  manage  to  get  along  very  nicely  with- 
out charity.  And  certainly  the  aim  of  our  de- 
mocracy should  be  to  make  charity  an  unneces- 
sary virtue.  This  whole  argument  I  have 
found  being  threshed  out  among  our  business 
men  of  insight. 
In  the  third  place,  it  is  clear  that  even  though 


70      THE  POLITICS  OF  INDUSTRY 

every  man  in  America  were  an  efficient  pro- 
ducer of  wealth,  and  American  wealth  were  dis- 
tributed with  mathematical  justice,  if  there  is 
such  a  thing,  still  democracy  would  in  time 
tumble  like  a  house  of  cards  if  the  wealth  of  the 
country  were  not  consumed  wisely.  That  fact 
is  leading  many  business  men  to  emphasize  the 
responsibility  of  business  in  the  education  of 
the  appetites  of  the  nation.  Advertising  is  one 
of  the  evident  instruments  which  business  must 
use  in  such  education.  The  social  significance 
of  advertising  will  receive  increasing  attention 
from  the  business  men  who  aspire  to  make 
their  businesses  minister  to  the  public  welfare 
as  well  as  to  private  profit.  Advertising  serves 
a  higher  function  than  the  mere  increase  of 
sales ;  it  lifts  the  tone  of  a  society  by  increasing 
the  sanity  of  consumption.  Charles  Frederick 
Higham,  a  London  advertising  man  who  has  a 
large  and  constructive  conception  of  his  profes- 
sion, in  his  engaging  volume  on  ' '  Scientific  Dis- 
tribution," says: 

One  thing  is  absolutely  certain,  and  that  is  that 
the  general  public  do  not  appreciate  in  the  least  the 
value  which  advertising  has  for  them.  They  seem  to 
consider  it  an  entertaining  extravagance  on  the  part 
of  business  men.  They  remain  childishly  unaware 


ANONYMOUS  LIBERALISM          71 

of  the  influence  it  has  upon  their  own  choice  and  taste 
and  welfare.  Such  criticism  as  they  put  forward  is 
summed  up  in  the  phrase,  "Who  pays  for  all  this!" 
And  the  answer  implied  is,  "We — the  public — do." 
But  broadly  speaking,  modern  scientific  advertising 
.  .  .  produces  such  a  growth  in  the  volume  of  business 
that  it  saves  in  the  cost  of  production  in  the  end,  and 
so  increases  the  profit  by  decreasing  the  selling  cost. 
It  is  unscientific  advertising  if  it  does  not  produce 
these  results. 

The  influence  of  advertising  upon  taste  is  in  the 
right  direction.  .  .  .  This  is  what  happens.  A  shoe 
manufacturer  wishes  to  increase  his  market.  He 
therefore  decides  to  advertise.  But  before  he  em- 
barks upon  that  expense  he  makes  sure  that  he  is  mak- 
ing a  shoe  of  a  superior  kind.  It  must  be  cut  from 
good  lasts,  be  a  shoe  that  keeps  its  shape,  wears  well, 
looks  smart,  and  has  about  it  an  air  of  distinction.  All 
these  points  he  puts  forth  boldly  in  his  advertisements, 
thus  throwing  out  impressions  of  what  a  really  good 
shoe  ought  to  be — impressions  that  stick  in  the  pub- 
lic's mind.  .  .  .  With  the  result  that  many  people  be- 
come dissatisfied  with  the  cheap,  unwieldy  shoes  they 
usually  buy.  So  much  so  that  they  agree  to  pay  the 
higher  price;  and  thus  ihey  learn  the  secret  of  true 
economy — which  is  always  to  buy  the  best  that  one 
can.  .  .  .  Despite  all  the  weakness  and  vulgarity  of 
trade  to-day — its  labor  problems,  its  bad  organiza- 
tion, the  ugliness  and  feebleness  of  its  craftsmanship 
— I  honestly  believe  it  will  work  out  its  own  salvation ; 
and  that  advertisement  is  the  great  tool  with  which 


72      THE  POLITICS  OF  INDUSTRY 

this  will  be  done.  .  .  .  The  influence  of  advertising 
upon  the  public  welfare  lies  in  its  power  to  raise  the 
standard  of  living  all  round.  .  .  .  Advertising  has 
helped  to  standardise  goods;  to  socialise  manners;  to 
individualise  taste.  It  has  beautified  dress,  democra- 
tised luxury.  It  fosters  a  healthy  dissatisfaction  with 
anything  less  than  the  best. 

Of  course  concern  with  sane  consumption  is 
abortive  unless  linked  with  concern  for  just  dis- 
tribution. The  hopeful  thing  is  the  increasing 
number  of  business  men  who  feel  that  the  adver- 
tising which  business  does,  if  it  is  not  to  be  par- 
asitic, must  make  for  increased  sanity  as  well 
as  increased  size  of  consumption  demands. 

It  is  needless  to  say  that  it  is  the  exceptional 
business  man  who  has  formulated  anything  like 
the  definite  conception  of  the  public  function  of 
business  that  I  have  here  reported  as  having 
found  among  certain  American  business  men. 
The  real  significance  lies  not  alone  in  the  fact 
that  a  growing  group  of  influential  business 
men  hold  these  views,  but  also  in  the  fact  that 
public  opinion  and  mass  pressure  are  turning 
these  principles  into  the  form  of  demands  upon 
business.  And  the  basis  of  hope  is  that  the  in- 
stinct of  self-preservation  among  the  many  in 
business  will  join  with  the  vision  of  the  few  in 


ANONYMOUS  LIBERALISM          73 

bringing  these  things  about.  At  any  rate,  here 
are  currents  of  thought  making  for  profes- 
sional standards  in  business. 

Third,  business  is  likewise  coming  to  demand 
adherence  to  a  code  of  professional  ethics. 
And  in  this  respect  business  promises  to  out- 
distance the  professions,  in  which  professional 
ethics  too  frequently  means  only  professional 
etiquette.  American  business  in  certain  quar- 
ters is  evolving  standards  of  professional 
ethics  in  the  sense  that  business  men  are  at- 
tempting to  think  out  fundamental  morality  in 
terms  of  business  activities;  trying  to  analyze 
just  how  it  is  possible  for  business  men, 
through  the  complicated  interdependence  of 
modern  business,  to  lie,  to  steal,  to  despoil  vir- 
tue, and  to  hold  slaves  by  indirect,  long-dis- 
tance, and  impersonal  methods;  trying  to  set 
up  standards  that  will  rule  these  essential  im- 
moralities out  of  American  business. 

Thanks  to  the  literature  of  exposure  that  was 
in  vogue  a  few  years  ago,  it  became  clear  that 
business  men  might,  while  adhering  to  the 
strictest  standards  of  private  morality,  commit 
all  of  the  sins  of  the  decalogue  by  indirect  and 
impersonal  methods.  In  fact,  interdependence 
came  so  swiftly  upon  the  heeds  of  individual- 


74      THE  POLITICS  OF  INDUSTRY 

ism  in  this  country  that  "good"  men  found 
themselves  doing  a  number  of  "bad"  things  in 
business  and  industry  before  they  fully  realized 
the  implications  of  their  acts.  Some  cynic, 
with  more  cleverness  than  insight,  once  re- 
marked that  Mr.  Roosevelt  discovered  the  ten 
commandments  and  gave  out  the  fact  as  news. 
But  the  truth  is  that  the  ten  commandments 
need  to  be  rediscovered  for  each  generation. 
Quite  clearly  the  decalogue  needed  reinterpre- 
tation  to  a  generation  in  which  men  might 
slowly  poison  a  nation  with  adulterated  food- 
stuffs, a  method  less  dramatic,  but  no  less  rep- 
rehensible, than  the  quicker  methods  used  by 
medieval  monarchs  with  disloyal  courtiers;  to 
a  generation  in  which  men  might  steal  through 
monopoly  control,  a  more  refined,  but  no  less 
effective,  method  than  Robin  Hood  employed. 
There  is  a  long  list  of  now  trite  comparisons 
between  the  impersonal  sins  of  a  society  of 
grand-scale  industry  and  the  more  direct  and 
easily  recognized  sins  of  the  simpler  and  more 
individualistic  society  that  preceded  it.  These 
comparisons  are  no  longer  the  exclusive  prop- 
erty of  the  muck-raker.  They  are  part  of  the 
common  thought  of  modern  business  men  who 
know  that  their  morality  is  more  than  a  ques- 


ANONYMOUS  LIBERALISM          75 

tion  of  personal  habits,  that  it  must  rest  upon 
a  carefully  thought-out  application  of  the  fun- 
damental principles  of  morality  to  the  compli- 
cated processes  of  modern  business.  It  is  the 
moral  duty  of  a  nation  to  keep  its  economic  and 
ethical  development  neck  and  neck.  Otherwise 
there  is  constantly  a  " twilight  zone"  in  which 
men  who  adhere  to  the  accepted  standards  of 
ethics  will  commit  socially  immoral  acts  be- 
cause the  moral  implications  of  such  acts  or 
methods  have  not  been  thought  out  and  stan- 
dards raised  against  them.  This  is  ground  so 
familiar  that  it  needs  only  a  gesture  calling  at- 
tention to  it  as  a  field  in  which  business  is 
evolving  professional  ethics. 

It  is  loyalty  to  such  large  aims  as  these  that 
will  make  business  truly  professional  in  the 
sense  that  business  will  consciously  promote 
the  social  virtues  of  efficiency,  justice,  and  san- 
ity while  dealing  with  the  material  processes 
of  production,  distribution,  and  consumption. 
These  professional  ideals  in  business,  it  should 
be  said  once  more,  have  been  here  sketched  not 
as  the  finished  picture  of  accomplished  fact,  but 
as  the  assessment  of  emerging  motive  forces 
which,  if  sedulously  cultivated  by  the  business 
and  industrial  leaders  of  America,  will  exert 


76      THE  POLITICS  OF  INDUSTRY 

determining  influence  upon  the  quality  and  rate 
of  progress  in  the  period  of  readjustment  we 
are  passing  through.  And  there  is  more  than 
nai've  optimism  upon  which  to  base  the  hope 
that  these  ideals  will  gain  vital  currency  in  the 
years  just  ahead.  Forces  of  self-interest  will 
supplement  the  innate  idealism  of  the  Ameri- 
can mind  in  making  these  ideals  more  fully  op- 
erative. These  forces  of  self-interest  have 
been  suggested  throughout  this  paper,  but  it  is 
worth  while  to  deal  more  specifically  with  them 
at  this  point. 

Business  men  find  themselves  under  the  ne- 
cessity of  deciding  what  their  attitude  is  to  be 
toward  the  restless  discontent  which  is  to-day 
manifest  throughout  the  world.  If  really  in- 
telligent self-interest  determines  that  attitude, 
we  may  expect  the  formulation  of  policies  wor- 
thy of  truly  professional  business.  This  dis- 
content is  not  a  passing  temper  provoked  by  the 
stage  tricks  of  a  small  group  of  professional 
malcontents ;  it  is  one  of  those  tidal  movements 
of  social  aspiration  that  now  and  then  sweep 
over  nations,  with  the  nations  too  frequently 
only  half  aware  of  what  is  happening.  Vis- 
count Morley,  referring  to  such  movements, 
said,  "Wise  statesmen  are  those  who  foresee 


ANONYMOUS  LIBERALISM          77 

what  time  is  thus  bringing,  and  try  to  shape  in- 
stitutions and  to  mould  men's  thought  and  pur- 
pose in  accordance  with  the  change  that  is  si- 
lently surrounding  them."  This  is  pertinent 
counsel  for  business  men  as  well  as  for  states- 
men in  these  times,  because  nothing  less  than 
this  statesmanlike  attitude  toward  the  current 
forces  of  unrest  and  change  can  protect  busi- 
ness; certainly  nothing  less  can  afford  guar- 
anty of  healthy  progress.  Business  statesman- 
ship is  the  one  effective  instrument  that  can 
bring  constructive  economic  results  out  of  a 
radical  hour;  simple  opposition  cannot.  John 
Stuart  Mill  once  said,  ' '  The  future  of  mankind 
will  be  greatly  imperiled  if  great  questions  are 
left  to  be  fought  out  between  ignorant  change 
and  ignorant  opposition  to  change."  This 
statement  might  well  be  printed  on  the  desk  cal- 
endar of  every  American  business  man,  for  it 
suggests  the  key  not  only  to  business  states- 
manship, but  to  business  success  as  well  in 
these  days  of  discontent  and  revaluation.  Au- 
tocratic indifference  to  the  aspirations  that  are 
moving  the  masses  of  a  nation  has  spelled  bank- 
ruptcy of  authority  for  governments  through- 
out history;  autocratic  attempts  to  suppress 
such  aspirations  have  spelled  revolution 


78      THE  POLITICS  OF  INDUSTRY 

throughout  history.  These  lessons  of  political 
leadership  are  not  lost  upon  far-sighted  busi- 
ness leadership.  On  every  hand  I  find  business 
men  saying  frankly  that  it  lies  pretty  largely 
with  the  leaders  of  business  and  industry 
whether  change  shall  be  disruptive  or  con- 
structive. 

If  a  stupid  conservatism  should  attempt  to 
revert  to  " big-stick"  methods  in  dealing  with 
labor  difficulties,  one  would  need  either  courage 
or  blindness  to  contemplate  the  future  with  an 
easy  mind.  Calling  in  the  police,  mobilizing 
the  militia,  employing  detectives,  arresting  la- 
bor leaders,  blocking  discussion,  and  forcing 
passions  underground  are  not  only  undemo- 
cratic methods;  they  are  unintelligent  meth- 
ods ;  they  are  played  out.  The  business  execu- 
tive who  uses  them  may  think  he  is  protecting 
his  interests,  but  his  firing-squad  type  of  mind 
does  not  see  far ;  in  using  such  methods,  or  even 
in  taking  an  undefined  attitude  of  emotional  de- 
nunciation toward  a  labor  difficulty,  he  is  play- 
ing directly  into  the  hands  of  the  revolutionary. 
Constructive  conservatism,  on  the  other  hand, 
by  refusing  to  employ  these  methods,  forces  the 
radical  leader  to  attempt  to  present  a  satisfac- 


ANONYMOUS  LIBERALISM         79 

tory  program  to  his  followers ;  for  an  average 
group  of  Americans  of  whatever  class  can  be 
held  together  only  by  one  of  two  methods,  com- 
mon action  against  a  common  antagonist  who 
flaunts  his  antagonism  in  their  faces  or  com- 
mon action  in  behalf  of  a  program  that  captures 
their  imagination  and  appeals  to  their  sense  of 
justice.  The  increasing  recognition  of  this  fact 
promises  to  help  materially  toward  lifting  the 
whole  question  of  labor  unrest  out  of  the  atmos- 
phere of  a  test  of  strength  alone.  Business 
men  realize  with  a  definiteness  that  is  relatively 
recent  that  capital  loses  even  when  it  wins  in 
a  fight  with  labor,  simply  because  business  can- 
not be  permanently  successful  and  perma- 
nently profitable  unless  its  relations  with  labor 
are  cordial, —  especially  with  the  numerical 
strength  of  labor  becoming  politically  articu- 
late,—  and  its  relations  with  labor  cannot  be 
consistently  cordial  as  long  as  labor  unrest  is 
dealt  with  upon  the  basis  of  a  tournament  ra- 
ther than  a  parliament.  A  system  of  relations 
between  employers  and  employees  that  usually 
breaks  down  when  the  issue  is  of  fundamental 
importance  and  forces  both  parties  to  threaten 
and  fight  their  way  toward  a  decision  is  clearly 


80      THE  POLITICS  OF  INDUSTEY 

inadequate  for  the  sort  of  times  we  are  coming 
into ;  it  is  a  costly  system,  as  all  expedients  are 
costly ;  it  generates  and  leaves  behind  too  many 
sullen  antagonisms  that  may  be  played  upon  by 
destructive  radicalism.  Alfred  E.  Zimmern, 
in  an  article  from  which  I  have  quoted  earlier 
in  this  paper,  says : 

Collective  bargaining  is  clearly  an  advance  on  the 
old  unequal  system  of  individual  wage-contracts. 
But  collective  bargaining  between  large-scale  organ- 
izations of  employers  and  workmen  involves  a  piling 
up  of  armaments  on  both  sides  not  unlike  that  of 
the  rival  European  groups  before  the  war.  At  its 
best  it  preserves  the  peace  by  establishing  a  precarious 
balance  of  power;  at  its  worst  it  precipitates  a  dis- 
astrous conflict ;  and,  in  either  case,  whether  it  works 
well  or  ill  for  the  moment,  it  is  non-moral  and  in- 
human, for  it  has  no  basis  in  a  sense  of  common  serv- 
ice or  public  duty.  Hence  it  creates  a  feeling  of 
divided  interest  and  permanent  estrangement  which 
has  been  all  too  visible  to  the  rest  of  the  community 
during  the  recurring  industrial  crises  of  the  last  ten 
years.  In  this  vicious  situation  a  great  national  re- 
sponsibility rests  upon  the  leaders  of  both  groups  of 
combatants. 

The  costly  inadequacy  of  the  present  system 
of  employer-employee  relations,  coupled  with 
the  fact  that  there  exists  to-day  throughout  the 


ANONYMOUS  LIBERALISM          81 

world  of  labor  a  heightened  determination  to 
secure  a  larger  share  in  the  profits  and  a  larger 
voice  in  the  management  of  industry,  means 
that  business  men,  purely  as  a  matter  of  good 
business,  must  take  the  initiative  in  a  sincere 
collaboration  with  labor  in  effecting  a  saner  or- 
ganization of  industrial  relations.  It  is  inter- 
esting to  note  that  this  is  just  what  is  happen- 
ing in  England,  for  instance,  where  responsible 
business  men  are  contributing  leadership  to 
the  movement  for  forms  of  industrial  self-gov- 
ernment, which,  administered  in  the  newer 
spirit,  should  not  only  satisfy  the  basic  aspira- 
tions of  labor,  but  also  put  business  and  indus- 
try upon  a  more  dependable  and  profitable 
basis  than  ever  before.  The  implications  of  in- 
dustrial self-government  both  to  employers  and 
employees,  as  they  are  worked  out  in  the  liter- 
ature and  discussed  by  the  leaders  of  that  move- 
ment, I  shall  take  up  in  detail  later  in  this  vol- 
ume. All  I  am  concerned  in  doing  at  this  point 
is  to  suggest  that  self-interest  is  making  for  con- 
structive conservatism  and  making  against  stu- 
pid conservatism,  which  knows  no  mood  but  de- 
nunciation, no  instrument  but  the  policeman's 
club  or  an  injunction.  And  this  means  the 
greater  development  among  business  men  of 


82       THE  POLITICS  OF  INDUSTRY 

that  genuinely  professional  spirit  which  is  one 
of  the  best  guaranties  of  orderly  progress  dur- 
ing our  readjustment  period. 

All  this  may  appear  to  be  only  a  dissertation 
upon  the  strategy  of  concession,  by  which  the 
leaders  in  business  and  industry  may  keep 
things  running  smoothly  for  a  time  by  granting 
just  enough  in  a  given  situation  to  keep  labor 
quiet  and  satisfy  a  progressive  public  opinion, 
and  repeating  the  manoeuver  whenever  indus- 
trial relations  become  strained.  And  such  tac- 
tics will  doubtless  be  used  in  certain  quarters. 
Certain  short-sighted  leaders  of  business  and 
industry  will  attempt  to  dilute  discontent  with 
half-measures.  But  the  more  far-sighted  lead- 
ers see  that  as  a  false  and  costly  procedure. 
The  trouble  with  it  is  that  there  is  no  end  to  it. 
The  appetite  of  labor,  no  less  than  the  appe- 
tite of  capital,  grows  by  what  it  feeds  on  under 
a  system  of  periodic  strikes  and  periodic  con- 
cessions. The  preservation  and  promotion  of 
sound  business  demands,  therefore,  that  busi- 
ness men  take  into  full  account  the  freshly 
awakened  and  increased  aspirations  of  la- 
bor which  until  some  better  method  is  es- 
tablished will  attempt  realization  through  de- 
mands that  hold  the  latent  threat  of  a  strike; 


ANONYMOUS  LIBERALISM         83 

and  having  taken  these  aspirations  into  ac- 
count, and  realizing  that  the  situation  cannot 
be  met  adequately  either  by  benevolence  or 
piece-meal  concession  on  the  part  of  employers 
or  by  usurpation  on  the  part  of  employees, 
boldly  face  the  problem  of  some  new  and  better 
organization  of  the  human  side  of  industry. 

It  is  fortunate  that  affairs  have,  in  our  day, 
assumed  a  posture  that  closes  every  other  ave- 
nue of  orderly  progress.  Unintelligent  resis- 
tance to-day  spells  revolution;  creative  leader- 
ship spells  progress. 

This  discussion  has  been  purposely  directed 
toward  motive  forces  rather  than  specific  poli- 
cies, because  the  logic  of  events  is  leading 
toward  more  broadly  conceived  policies,  but 
whether  the  logic  of  events  will  produce  its  per- 
fect work  depends  upon  the  attitude  which  lead- 
ership takes. 

To  summarize,  then,  the  simple  thesis  of  this 
paper  which  I  should  hesitate  to  discuss  at  such 
length  except  that  its  current  implications 
strike  so  closely  at  the  heart  of  the  total  prob- 
lem of  American  content  and  progress  that  re- 
iteration may  be  pardoned  in  an  earnest  search 
for  emphasis : 

American  business   and  industry  rendered 


84      THE  POLITICS  OF  INDUSTRY 

history  making  service  during  the  war,  because 
in  response  to  emergency  demands  and  govern- 
mental edicts  and  under  the  inspiration  of  a 
challenging  cause  business  and  industry  were 
dedicated  to  the  accomplishment  of  a  great  so- 
cial objective,  and  business  men  brought  to 
their  work  the  same  professional  spirit  that  the 
doctor  and  sanitarian  carry  into  a  fever- 
stricken  region  that  is  to  be  reclaimed  for  civ- 
ilized life.  Both  the  insuring  of  orderly  prog- 
ress and  the  working  out  of  a  permanently 
successful  business  order,  under  the  conditions 
the  war  has  produced  and  left  behind,  require 
the  continuance  and  development  of  that  pro- 
fessional spirit  in  business.  In  normal  times 
we  cannot  count  upon  a  hot-house  growth  of 
the  professional  spirit  in  business,  fostered  by 
governmental  requirements,  but  must  depend 
upon  the  natural  development  of  such  spirit  in 
our  business  and  industrial  leaders.  That 
makes  a  study  of  the  motive  forces  behind  the 
business  thinking  of  the  country  fundamentally 
important. 

Before  the  war,  the  professional  spirit  in 
business  was  on  the  increase.  Business  was 
more  and  more  demanding  a  breadth  of  knowl- 
edge and  an  intellectual  preparation  which 


ANONYMOUS  LIBERALISM          85 

equalled  if  not  exceeded  the  demands  made  by 
any  of  the  time-honored  professions. 

Business  men  were  more  thoroughly  visualiz- 
ing their  business  in  its  social  relations;  they 
were  becoming  more  concerned  that,  in  addi- 
tion to  making  profits,  their  business  should 
make  some  ultimate  contribution  toward  in- 
creasing the  efficiency  of  the  production,  the 
justice  of  the  distribution,  and  the  sanity  of  the 
consumption  of  American  wealth. 

Business  men  were  erecting  standards  of 
business  ethics  as  the  result  of  seeing  that  the 
complicated  interdependence  of  modern  life 
makes  it  possible  for  business  men  to  commit 
all  of  the  old  sins  by  new  methods  that  are  indi- 
rect and  impersonal. 

Wherever  these  professional  ideals  have 
been  brought  into  full  and  intelligent  play  in 
American  business  institutions,  it  has  been 
proved  that  they  are  not  simply  idealistic  but 
costly  ventures  that  business  men  may  afford 
to  undertake,  in  a  mood  of  benevolent  pater- 
nalism, after  a  business  has  succeeded  and 
piled  up  a  surplus;  rather  that  they  are  the 
corner-stones  of  permanently  successful  busi- 
ness. 

Now  that  the  war  is  over,  business  and  indus- 


86      THE  POLITICS  OF  INDUSTRY 

try  face  the  problem  of  a  mass  restlessness 
which  in  some  quarters  has  a  definite  program, 
in  other  quarters  simply  a  medley  of  undefined 
but  active  aspirations.  Because  the  masses 
throughout  the  world  have  during  the  war  be- 
come more  keenly  conscious  of  their  political 
power,  should  they  organize  and  use  it,  the  in- 
adequacy of  mere  make-shift  concessions  is  ap- 
parent, and  business  leadership  is  challenged 
to  make  a  fresh  and  constructive  approach  to 
the  problem  of  industrial  relations. 

The  primary  inspiration  of  such  a  fresh  and 
constructive  approach  to  the  problem  of  indus- 
trial relations  may  come  from  either  of  two 
groups  —  the  men  at  the  top,  or  the  salaried 
men  who  do  the  actual  job  of  administration 
in  factories,  mines,  and  stores.  There  is  a 
fairly  general  disposition  to  make  the  man  at 
the  top  the  scape-goat  for  all  of  the  injustice 
and  conservatism  that  may  mark  a  given  indus- 
try. I  have  no  desire  to  lift  emphasis  from  the 
responsibility  that  the  man  at  the  top,  by  virtue 
of  his  position,  must  carry ;  but  sound  analysis 
demands  recognition  of  the  fact  that  frequently 
the  salaried  manager,  who  is  administering  the 
affairs  of  a  local  unit  of  an  industry,  is  just  as 
jealous  of  his  perquisites  of  power  and  author- 


ANONYMOUS  LIBERALISM          87 

ity  and  just  as  averse  to  any  broadening  of  the 
base  of  control  as  the  man  at  the  top.  In  fact 
it  will  usually  be  found,  in  an  industry  where 
the  administration  of  the  human  factor  is  unen- 
lightened, that  a  hierarchy  of  resistance  to  any 
really  forward-looking  and  creative  policy  re- 
specting the  human  side  of  industry  runs  all 
the  way  from  the  directors'  room  to  the  office 
of  the  local  boss.  It  is  far  easier  and  more 
dramatic,  in  a  study  of  the  relation  of  business 
leadership  to  social  unrest,  to  point  an  accus- 
ing finger  at  a  conspicuous  director  or  financier 
and  say,  "Thou  art  the  man!"  But  the  appli- 
cation and  administration  of  business  liberal- 
ism is  a  more  complicated  matter  than  the  mere 
preachment  of  business  liberalism.  It  must 
take  into  account  all  the  men  and  all  the  fac- 
tors in  the  entire  organization  of  industry  and 
reckon  in  advance  with  the  strength  of  opposi- 
tion and  support  that  may  be  expected  or  se- 
cured. The  key  groups,  however,  in  the  deter- 
mination and  application  of  any  large  policy  in 
industry,  as  now  organized,  are  the  men  at  the 
top  and  the  salaried  managers  who  stand  in 
daily  contact  with  the  work  and  the  workers  of 
the  industry. 
A  better  organization  of  industrial  relations 


88       THE  POLITICS  OF  INDUSTRY 

may,  therefore,  come  from  the  action  of  either 
of  these  groups.  The  successful  administra- 
tion of  a  new  order  demands,  of  course,  a  collab- 
oration of  these  two  groups.  A  new  note  in 
the  human  side  of  industry  may  be  struck,  and 
struck  quickly,  if  the  men  at  the  top  assume 
the  full  educational  responsibilities  of  their 
position  and  deliberately  inspire  the  salaried 
managers  of  industry  to  as  consistent  concern 
in  the  human  side  of  industry  as  they  already 
evince  in  the  technical  side.  On  the  other 
hand,  it  may  be  that  the  new  order  will  come 
more  slowly  as  a  result  of  pressure  upon  the 
men  at  the  top  by  the  younger  salaried  men 
who  manage,  men  who  have  carried  into  their 
work  the  education  and  the  ideals  of  the  mod- 
ern engineer  who  is  not  so  unscientific  as  to 
leave  out  of  his  reckoning  the  human  factor  in 
any  enterprise. 

This  much  should  be  said,  in  passing,  as  an 
explanation,  if  not  a  defense,  of  the  salaried 
man's  slowness  in  experimenting  with  the  hu- 
man problem  of  industry :  in  the  main,  the  sal- 
aried men  of  industry  have  not  been  made  to 
feel  that  the  men  at  the  top  were  as  deeply  in- 
terested in  the  human  as  in  the  financial  prob- 
lem of  industry.  Therefore,  it  is  for  the  men 


ANONYMOUS  LIBERALISM          89 

at  the  top,  at  this  time  when  sound  business 
judgment  prompts  it,  to  create  in  the  minds  of 
the  salaried  managers  of  American  industry 
the  impression  that  a  discovery  on  their  part 
of  a  better  way  of  handling  the  human  prob- 
lem of  industry  will  receive  as  hearty  welcome 
and  as  careful  consideration  in  the  directors' 
room  as  will  a  new  method  of  extracting  ore, 
let  us  say.  The  men  at  the  top  are  now  chal- 
lenged by  the  present  situation  to  create  among 
their  men  the  atmosphere  for  sane  experiment 
with  the  problem  of  industrial  relations  upon 
exactly  the  same  base  of  reasoning  that 
prompts  them  to  set  scientists  at  work  in  their 
laboratories. 

I  think  I  could  name  twenty  leaders  of  Amer- 
ican business  and  industry  who  at  this  moment 
hold  it  within  their  power  to  determine  the 
course  of  industrial  relations  in  this  country 
for  the  next  twenty-five  years  at  least.  What 
I  mean  concretely  is  this:  There  are  twenty 
outstanding  leaders  of  American  business  and 
industry  who  have  always  been  classed  as  con- 
servative men  concerned  primarily  with  the 
financial  problem  of  industry;  if  these  twenty 
men  should  pool  their  brain-power  in  a  study 
of  the  labor  problem  with  the  same  sustained 


90      THE  POLITICS  OF  INDUSTKY 

thought  they  have  given  to  financial  problems, 
if  they  should  counsel  with  students  of  labor 
as  they  have  counselled  with  students  of  chem- 
ical, electrical,  and  other  problems  that  touch 
their  business  interests,  and  if  they  should  take 
the  initiative  in  making  a  sincere  and  exhaus- 
tive study  of  the  whole  area  lying  between  the 
extreme  forms  of  private  capitalism  and  the  ex- 
treme forms  of  State  Socialism  in  order  to  find 
out  whether  or  not  there  is  a  middle  ground 
of  industrial  self-government  on  which  both  la- 
bor and  capital  can  stand  in  a  co-operation  that 
will  minister  to  the  legitimate  aims  of  both,  I 
have  no  hesitancy  in  saying  that  they — these 
twenty  business  and  industrial  leaders — could 
with  dramatic  suddenness  invent  a  new  order 
of  industry.  I  am  not  being  carried  away 
with  rhetoric.  I  have  seen  enough  instances  of 
industrial  self-government  at  work  to  know 
that  the  tested  principles  of  free,  responsible, 
and  representative  government  can  be  adapted 
to  business  and  industry  in  a  manner  that  will 
go  far  toward  eliminating  the  waste  of  labor 
conflicts,  uncovering  hitherto  unused  reserves 
of  enterprise  and  ingenuity  in  the  working 
force,  largely  freeing  the  time  of  executives 
from  the  administration  of  discipline  which  to- 


ANONYMOUS  LIBERALISM          91 

day  drains  away  valuable  executive  energy  that 
should  be  employed  in  the  larger  creative  tasks 
of  policy  and  expansion,  and  actually  making 
business  and  industry  more  profitable.  The 
twenty  or  more  men  whom  I  have  in  mind  today 
have  it  in  their  power  to  create  history  as  truly 
as  did  the  men  who  formulated  the  Declaration 
of  Independence  or  the  men  who  drafted  the 
Constitution  of  the  United  States.  In  fact  the 
requirement  of  the  industrial  situation  today  is 
very  much  the  same  as  the  requirement  of  the 
governmental  situation  then.  The  labor  prob- 
lem today  is  not  a  problem  of  working-man 
psychology,  as  the  attitude  and  policy  of  many 
men  would  seem  to  indicate  they  think.  The  la- 
bor problem  is  a  constitutional  problem.  The 
constitutional  problem  that  our  political  fathers 
faced,  our  business  men  face  today  in  business 
and  industry  under  the  name  of  the  problem 
of  management  or  control.  Until  that  problem 
is  solved  by  genuine  business  statesmanship, 
the  labor  problem  will  doubtless  continue  as  a 
balance  of  power  game  of  see-saw,  and  in  the 
midst  of  every  labor  conflict  we  shall  hear  the 
familiar  jibes  that  labor's  only  interest  is  in 
shorter  hours  and  higher  wages  and  that  capi- 
tal's only  interest  is  in  longer  hours  and  lower 


92      THE  POLITICS  OF  INDUSTRY 

wages,  jibes  that  fly  wide  of  the  mark  simply 
because  no  one  faces  boldly  the  real  challenge 
of  the  labor  problem.  The  American  public  is 
waiting  for  a  business  statesmanship  that  will 
attack  the  government  problem  in  industry. 

One  does  not  wish  to  believe  less  than  this: 
American  business  men  of  vision,  face  to  face 
with  the  emergency  demands  of  an  era  of 
change,  will  be  an  important  party  to  the  task 
of  creating  in  this  country  a  constructive  liber- 
alism that  will  restrain  reckless  radicalism  by 
formulating  and  putting  into  effect  a  program 
bounded  only  by  the  frontiers  of  economic  wis- 
dom and  practical  justice. 


IV 

THE  POLITICS  OF  INDUSTRY 

Making  war  with  phrases  vs.  Making  war  with  principles — A 
phrase  that  will  haunt  the  counsels  of  business  and  indus- 
try— The  Balance  of  Power  system  breaks  down  in  both 
international  and  industrial  relations — Competition  and 
drift  vs.  cooperation  and  control — The  futility  of  half- 
measures — The  origin  of  the  modern  labor  problem — A 
glance  at  handicraft  days — Lost  assets  of  modern  industry 
— Fighting  for  a  lost  control — Inadequate  expedients — Col- 
lective bargaining — Strikes — Lockouts — Conciliation — Arbi- 
tration— Investigation — Social  legislation — Welfare  work — 
Profit-sharing — Scientific  Management — What  the  ultimate 
labor  issue  is — Competitive  bargaining  vs.  Cooperative  gov- 
ernment— England  moves  toward  industrial  self-government 
— The  Whitley  Report  analyzed — Making  industry  a  train- 
ing school  for  political  citizenship. 

THE  war  has  left  the  world  with  its  face 
toward  the  dawn,  impatient  to  crowd  the 
progress  of  a  century  into  a  decade.  The  popu- 
lar assumption,  sedulously  fostered  by  those 
with  the  greatest  stake  in  the  status  quo,  that 
social  changes  must  of  necessity  be  effected 
slowly  if  they  are  to  be  effected  safely  has  been 
shattered.  During  the  war,  men  on  the  battle- 
field and  in  the  workshop  have  seen  how  quickly 
the  industrial  standards  and  processes  of  an 

93 


94      THE  POLITICS  OF  INDUSTRY 

entire  nation  can  be  transformed  when  once  the 
national  will  has  come  under  the  sway  of  a 
dominant  and  unifying  motive.  And  men  who 
have  watched  a  new  Industrial  Revolution  take 
place  before  their  eyes  within  a  few  swift 
months  are  likely  to  be  critical  of  any  theory 
or  leadership  that  attempts  to  set  an  unneces- 
sarily slow  schedule  for  progress  in  peace  time. 
If  new  ideas  outstrip  our  capacity  to  apply 
them,  we  shall  find  ourselves  the  victims  of  a 
mischievous  medley  of  undigested  idealisms; 
but,  unless  leadership  abdicates  in  the  face  of 
its  supreme  opportunity,  these  new  determina- 
tions of  our  time  may  be  made  the  driving  force 
of  a  period  of  unprecedented  progress  toward 
a  finer  organization  of  our  common  interests 
and  actions. 

The  motivating  stakes  of  the  war  were  clearly 
certain  basic  principles,  upon  the  vindication 
of  which  the  integrity  of  civilization  itself 
hinged — the  principle  of  right  as  the  basis  of 
human  association,  the  applicability  of  the 
moral  law  to  public  affairs,  and  the  guaranty 
of  the  weak  against  the  lawless  aggression  of 
the  strong.  Regardless  of  the  frequency  with 
which  the  ghost  of  Machiavelli  may  have  walked 
through  the  corridors  of  certain  foreign  offices, 


THE  POLITICS  OF  INDUSTRY      95 

these  were  the  principles  that  alike  inspired 
our  armies  of  industry  and  arms;  these  were 
the  principles  that  set  the  tone  of  civilian 
morale;  these  were  the  principles  upon  which 
statesmen  appealed  to  their  countries.  These 
principles  ran  through  state  papers  and  in- 
formal diplomatic  conversations  with  the  in- 
sistent recurrence  of  a  motif,  giving  to  the 
whole  texture  of  international  thought  during 
the  war  the  qualities  of  sustained  and  consistent 
purpose.  A  world  debate  ran  parallel  with  the 
world  war.  The  period  of  greatest  distraction 
proved  to  be  the  period  of  greatest  concentra- 
tion upon  fundamental  ideas.  The  studied 
frivolities  of  dinner  table  conversations  gave 
way  to  serious  discussions  of  the  conflict  of 
ideas  that  was  going  on  above  the  battle  of 
arms.  Abstract  principles  of  political  and 
social  philosophy  were  turned  into  battle  cries 
— a  thing  crowd  psychologists  could  have 
proved  impossible  before  the  war.  The  Amer- 
ican people,  in  particular,  were  drawn  into  the 
war  by  an  ideal  rather  than  driven  into  it  by 
an  insult.  And  that  fact  will  have  an  import- 
ant bearing  upon  after-the-war  thought  and 
action  in  this  country.  For  to  awaken  the  war 
spirit  of  a  nation  with  a  catch-phrase  that 


96      THE  POLITICS  OF  INDUSTRY 

vividly  expresses  popular  resentment  to  some 
dramatic  insult  is  one  thing;  to  awaken  the 
war  spirit  of  a  nation  with  the  lure  of  some 
fundamental  principle  is  another  thing.  The 
catch-phrase,  carried  through  the  battle  as  a 
stimulator  of  morale,  is  forgotten  in  the  first 
flush  of  victory ;  the  fundamental  principle  has 
a  more  sustained  vitality,  reacting  upon  popu- 
lar thought  long  after  the  battle  and  insistently 
demanding  ultimate  application.  A  phrase 
like  "Remember  the  Maine"  does  not  neces- 
sarily produce  any  after- war  effects;  but  a 
phrase  like  "the  world  must  be  made  safe  for 
democracy"  has  in  it  a  yeastiness  that  begins 
its  real  fermentation  after  the  nation  has  had 
time  to  catch  its  breath  from  the  exertions  of 
war.  That  phrase  will  haunt  the  counsels  of 
politics  and  industry  for  many  years  to  come. 
As  Americans  begin  to  assess  the  results  of 
their  Great  Adventure  in  the  war  and  to  think 
out  the  implications  of  the  principles  they 
helped  to  vindicate,  a  plain  parallel  between 
international  and  industrial  relations  will  be 
recognized.  Men  who  have  had  this  world  de- 
bate on  right  as  the  basis  of  human  association, 
the  moral  law  in  public  affairs,  and  the  safe- 
guarding of  the  weak  against  the  strong,  tossed 


back  and  forth  over  their  heads  as  they  fought 
in  the  trenches  will  quite  naturally  ask  whether 
these  principles,  after  being  adjudged  the 
guiding  principles  of  international  relations, 
should  not  assume  similar  primacy  in  indus- 
trial relations.  When  this  sense  of  parallel 
really  grips  the  popular  mind,  industrial  states- 
manship will  find  itself  genuinely  challenged. 
The  brevity  of  our  part  in  the  war  may  have 
spared  us  many  of  the  depressions  and  robbed 
us  of  many  of  the  disciplines  of  war,  but  the 
examination  and  discussion  of  the  principles 
for  which  the  war  was  fought  went  to  greater 
lengths  in  the  United  States,  before  the  war's 
challenge  was  accepted,  than  in  any  of  the 
belligerent  countries.  When,  therefore,  Amer- 
icans begin  to  apply  to  industry  the  political 
principles  for  which  they  fought,  the  scope  and 
insistence  of  the  demand  for  application  may 
be  greater  here  than  in  Europe,  although  our 
industrial  unrest  may  be  less  dramatic  and 
emotional. 

As  a  flash  of  lightning  illuminates  a  land- 
scape, the  war  revealed  the  existing  systems 
of  international  and  industrial  relations  for 
what  they  are,  throwing  into  clear  relief  their 
essential  inadequacies.  Before  the  war,  many 


98      THE  POLITICS  OF  INDUSTRY 

leaders  both  in  the  camp  of  capital  and  the  camp 
of  labor,  from  whom  we  had  the  right  to  ex- 
pect constructive  leadership,  gave  the  problem 
of  industrial  relations  but  fractional  consider- 
ation. They  busied  themselves  now  with  this 
problem  of  wages  and  then  with  that  problem 
of  hours,  but  did  not  subject  to  critical  ex- 
amination the  system  of  industrial  relations  it- 
self. But  the  war  has  altered  the  attitude  and 
widened  the  scope  of  industrial  thought  both  in 
business  and  labor  circles.  And  just  as  many 
statesmen  have  frankly  acknowledged  the 
breakdown  of  the  old  system  of  a  balance  of 
power  and  conflict  of  controls,  and  asserted  the 
necessity  for  a  fresh  ordering  of  international 
relations  based  upon  the  greatest  practicable 
degree  of  cooperation,  so  the  best  brains  of 
business  and  labor  frankly  acknowledge  that  the 
old  system  of  a  balance  of  power  and  conflict 
of  controls  between  capital  and  labor  will  no 
more  meet  the  future  demands  of  peace  time 
than  it  met  the  demands  of  war  time,  and  that 
the  time  has  come  for  both  capital  and  labor 
to  bring  high  conception  and  courageous  ex- 
ecution to  the  creation  of  a  new  order  of  in- 
dustrial relations  that  will  materially  reduce, 
if  not  remove,  the  social  and  economic  waste  of 


THE  POLITICS  OF  INDUSTRY      99 

the  present  system  of  competing  suspicions 
under  which  labor  brandishes  the  strike  weapon 
and  capital  anticipates  or  parries  the  blow  with 
the  lock-out  or  the  injunction,  while  the  public 
plays  the  role  of  the  harassed  neutral. 

This  new  attitude,  which  outstanding  leaders 
of  both  capital  and  labor  are  taking  toward  the 
problem  of  industrial  relations,  is  marked  by 
certain  gratifying  features.  The  fundamental 
reorganization  of  the  present  system  of  indus- 
trial relations  is  looked  upon  as  an  essentially 
conservative  measure ;  not  as  a  radical  experi- 
ment proposed  by  doctrinaires  detached  from 
profit  and  loss  responsibility,  not  as  the  organ- 
ized demand  of  class  cupidity,  but  as  one  of 
those  normal  changes  in  method  to  meet 
changed  conditions  which  intelligent  adminis- 
tration always  effects.  The  parallel  between 
international  and  industrial  relations  holds 
good  in  this  particular.  A  new  international 
order  based  upon  a  cooperation  of  power  rather 
than  a  conflict  of  power  is  the  only  way  that 
lies  open,  to  those  interested  in  sanely  ordered 
progress,  to  control  and  administer  the  com- 
plicated interdependence  of  the  modern  world; 
it  is  in  that  sense  a  conservative  proposal  rather 
than  the  radical  adventure  in  political  knight- 


100     THE  POLITICS  OF  INDUSTRY 

errantry  that  certain  statesmen,  who  persist  in 
looking  wistfully  over  their  shoulders  at  George 
"Washington,  contend.  In  international  rela- 
tions the  choice  is  between  clear  alternatives — 
competition  and  drift  or  cooperation  and  con- 
trol. In  industrial  relations  leadership  is  con- 
fined to  a  choice  between  the  same  alternatives. 
Political  statesmanship  must  choose  between  in- 
ternational association  and  international  anar- 
chy. Industrial  statesmanship  must  choose  be- 
tween a  fundamental  reorganization  of  indus- 
trial relations  upon  a  more  democratic  basis  and 
an  intensified  class  struggle,  with  revolution  as 
a  probability  to  be  reckoned  with.  The  former 
means  for  society  economy  and  conservative 
progress,  the  latter  means  costly  radical  ex- 
cess. 

Another  gratifying  feature  of  this  new  atti- 
tude is  that  its  adherents  are  not  wasting  their 
energy  and  further  complicating  the  situation 
by  abusing  either  organized  capital  or  organ- 
ized labor;  they  are  concerned  with  the  using 
of  both  in  the  structure  and  processes  of  the 
new  order.  Capitalists  have,  in  certain  in- 
stances, abused  the  power  of  the  lock-out  and 
the  injunction,  granted.  Labor  leaders  have, 
in  certain  instances,  abused  the  power  of  the 


THE  POLITICS  OF  INDUSTRY.    101. 

strike,  granted.  But  it  is  beside  the  mark  to 
try  to  correct  such  abuses  by  bitter  arraignment 
either  of  the  anti-social  capitalists  or  the  anti- 
social labor  leaders  in  question;  both  are  the 
inevitable  and  logical  product  of  an  anti-social 
system  of  industrial  relations.  And  the  aver- 
age American  who  criticises  them  would  act 
exactly  the  same  were  he  in  their  position,  with 
their  responsibility  to  their  fellows,  and  their 
limited  choice  of  instruments  of  influence  un- 
der the  prevailing  system. 

The  most  important  thing  in  the  whole  in- 
tellectual approach  to  this  problem  of  industrial 
relations  and  social  unrest,  on  the  part  of  the 
leaders  of  business  and  labor,  is  to  see  that 
what  is  at  issue  is  the  fundamental  reorganiza- 
tion of  a  system,  not  the  haphazard  patching 
up  of  an  old  system.  Whether  it  meets  our 
wishes  or  not,  the  time  for  half-measures  is 
past.  Half-measures  may  delay,  they  cannot 
prevent  the  social  revolution  toward  which  the 
present  " armed  camp"  system  of  industrial  re- 
lations is  inevitably  working.  The  advocate 
of  the  half-measure  is  a  but  slightly  less  effec- 
tive ally  of  the  revolutionary  than  is  the  blind 
reactionary.  This  holds  true  even  in  the  case 
of  those  willing  to  go  far  in  the  matter  of  re- 


102     THE  POLITICS  OF  INDUSTRY 

pairs.  There  are  on  all  hands  men  who  say: 
"This  is  a  time  of  unrest.  The  workers  are 
everywhere  becoming  articulate,  demanding 
their  place  in  the  sun.  If  our  businesses  are  to 
succeed  we  must  adjust  our  methods  to  this 
fact,  just  as  we  change  the  weight  of  our  cloth- 
ing when  we  go  into  a  milder  or  more  severe 
climate.  "We  may  be  obliged  to  make  some 
rather  costly  concessions,  but  it  is  inevitable 
and  we  might  as  well  be  sportsmanlike  about 
it."  Such  an  attitude  is  a  good  long  step  be- 
yond the  attitude  of  the  blind  reactionary,  but 
its  fault  is  that  it  is  determined  upon  the  basis 
of  concession  instead  of  frank  and  courageous 
reconstruction.  Such  an  attitude  ignores  the 
plain  fact  that  it  will  not  be  enough  simply  to 
bow  gracefully  to  such  industrial  readjustments 
of  policy  and  administration  as  the  war  has 
proved  to  be  of  greater  economic  efficiency,  to 
institute  by  careful  economy  of  concession  such 
reforms  as  may  prove  essential  to  a  smooth 
return  to  normal  industry,  to  patch  up  the 
patently  weak  spots  which  the  war  has  revealed 
in  economic  organization,  to  speed  up  the  ma- 
chinery of  production,  and  to  effect  something 
of  a  new  deal  in  the  distribution  of  the  increased 
output  so  that  all  classes  will  share  to  some  de- 


THE  POLITICS  OF  INDUSTRY     103 

gree.  Concession,  even  when  going  as  far  as 
all  this,  will  fail  to  meet  the  situation,  for  cer- 
tain entirely  clear  reasons. 

For  one  thing,  such  a  policy  of  concession 
overlooks  or  affects  to  ignore  the  fact  that  the 
central  significance  of  the  current  unrest,  with 
its  resultant  programs  of  aspiration,  lies  not 
so  much  in  the  extent  as  in  the  character  of  the 
unrest.  The  one  thing  that  a  patch-work  of 
palliatives  and  concessions  does  not  touch  is 
the  one  thing  that  lies  at  the  heart  of  the  mod- 
ern labor  problem  and  gives  to  the  modern  la- 
bor movement  its  sustained  and  vibrant  pur- 
pose, and  that  is  the  status  of  the  worker  in 
industry.  This  question  of  status  has  been  a 
question  of  increasing  moment  ever  since  the 
introduction  of  machine  power  in  production 
and  the  rise  of  the  factory  system.  Before 
that  time,  industry  was  a  relatively  simple  af- 
fair in  the  matter  of  its  mechanics  and  in  the 
matter  of  its  human  relations  as  well.  The 
man  who  was  master  of  a  handicraft  produced 
his  wares  in  his  own  home,  where  he  associated 
with  himself  a  few  apprentices  and  journey- 
men. He  and  his  workmen  dined  at  the  same 
family  table.  There  was  little,  if  any,  social 
cleavage  between  the  two — master  and  work- 


104     THE  POLITICS  OF  INDUSTRY 

men.  The  workman  married  the  master's 
daughter,  and  pursued  his  labor  as  a  scholar 
pursues  a  study,  looking  upon  his  labor  as  a 
process  of  education  that  would  in  time  make 
him  a  master  and  secure  for  him  the  civic 
privileges  of  a  freeman.  The  master  owned 
his  simple  tools.  He  was  master  of  his  own 
profits.  His  customers  were  his  neighbors — 
a  fact  that  made  good  work  a  matter  of  per- 
sonal pride  and  responsibility.  The  simple 
regulations  of  his  guild  and  of  his  city  safe- 
guarded his  trade.  The  men  of  this  era  of 
simple  processes  and  intimate  relations  lived 
simply.  Even  the  limited  luxuries  of  the  mod- 
ern poor  were  unknown  to  many  of  the  masters 
of  that  day.  But  the  simple  system  had  cer- 
tain compensating  advantages  which  have  been 
lost  and  which  it  is  the  function  of  industrial 
statesmanship  to  restore  in  modern  industry. 
These  advantages,  while  clearly  evident,  merit 
a  brief  summarization  which  it  will  be  valuable 
to  throw  into  contrast  with  certain  features  of 
the  present  system  of  industrial  relations,  for 
out  of  that  contrast  will  arise  a  clear  definition 
of  the  ultimate  labor  issue.  In  the  simpler 
days  of  industry,  before  division  of  labor  came 
with  its  far-reaching  possibilities  of  blessing 


THE  POLITICS  OF  INDUSTRY     105 

and  blight,  the  workman  was  able  to  keep  his 
spirit  fresh  and  his  eye  alight  with  a  creative 
and  personal  interest  in  the  article  he  was  pro- 
ducing, he  was  able  to  go  his  way  with  little  of 
the  fear  of  insecurity  or  the  deadening  sense 
of  dependence,  and  he  was  lured  by  hope — the 
ladder  that  led  from  apprenticeship  to  master- 
ship was  not  a  discouragingly  long  ladder. 

Then  the  machine  entered,  and  the  simple  pro- 
cesses and  intimate  relations  of  the  handicraft 
and  small-scale  production  order  of  industry 
began  rapidly  to  disappear.  The  race  of  mas- 
ters of  small  shops  from  that  time  was  a  pass- 
ing race.  They  could  not  buy  the  expensive 
machines  as  they  had  bought  their  simple  tools, 
as  they  had  bought  their  hand  spindles  and 
hand  looms,  for  instance.  Production  forsook 
the  home  for  the  factory.  The  concentration 
of  production  in  factories  involved  the  concen- 
tration of  workmen  about  the  factory,  impetus 
to  the  forces  making  for  the  crowded  city.  At 
first  workmen  showed  spirited  resistance  to  the 
introduction  of  machine  power  in  production, 
which  in  the  period  of  transition  threw  masses 
of  workmen  out  of  employment ;  factories  were 
mobbed  and  machinery  was  wrecked.  But  the 
men  who  owned  the  machines  had  a  telling  way 


106     THE  POLITICS  OF  INDUSTRY 

with  legislators.  England  placed  the  death 
penalty  on  the  wrecking  of  machinery.  The  old 
masters  began  by  breaking  the  machinery ;  they 
ended  with  having  their  own  spirit  broken. 
Men  who  had  been  masters  of  tools  became  ser- 
vants of  machines,  and  for  the  first  time  the 
world  of  industry  was  cut  in  two, — capital  and 
labor, — and  from  the  agonies  of  the  displace- 
ment a  legacy  of  class  hatred  hung  over  the 
new  order.  Machine  production  made  for  the 
steady  disintegration  of  the  three  outstanding 
advantages  of  the  hand-production  system  as 
mentioned  above.  It  became  increasingly  diffi- 
cult for  the  workman  to  maintain  a  creative 
and  personal  interest  in  the  article  being  pro- 
duced, when  the  only  part  he  played  in  its  pro- 
duction was  the  tending  of  a  machine  that  with 
every  click  monotonously  turned  out  one  small 
part  of  the  article,  the  workman  in  question 
never  seeing  even  that  small  part  fit  itself  into 
the  finished  whole.  With  every  year  industry 
became  more  and  more  specialized  so  that  pride 
of  craftsmanship  found  itself  subtly  disin- 
tegrated under  the  growth  of  a  system  of  pro- 
duction which  sentenced  the  average  workman 
to  devote  the  major  part  of  his  energy  to  count- 
less repetitions  of  a  single  act  or  process,  but 


THE  POLITICS  OF  INDUSTRY     107 

one  of  a  hundred  operations  used  in  turning 
the  raw  material  into  the  marketable  article. 
With  complete  loss  of  the  ownership  of  the  in- 
struments of  production  and  of  raw  materials, 
the  old  sense  of  security  gave  way  to  the  fear 
of  insecurity  both  as  to  wages  and  to  tenure  of 
employment,  and  the  upstanding  independence 
of  the  handicraft  days  became  dulled  by  a  nar- 
cotic sense  of  dependence.  For  in  the  early 
stages  of  machine  production  the  machines  pro- 
duced goods  so  rapidly  that  periodically  a 
glutted  market  automatically  stopped  produc- 
tion until  consumption  could  catch  up ;  and  that 
meant  a  work  famine  with  the  fear  it  threw  into 
the  hearts  of  the  employed.  It  hardly  needs 
saying  that  the  new  order  of  machine  produc- 
tion dimmed  the  hope  that  formerly  lured  the 
worker — at  least  the  particular  hope  he  form- 
erly entertained  of  ultimately  becoming  a  mas- 
ter in  his  own  right,  for  clearly  the  elect  few 
alone  would  aspire  to  the  accumulation  of 
wealth  sufficient  to  own  a  factory. 

Here,  then,  are  certain  valuable  industrial 
assets  that  were  lost,  let  us  hope  temporarily, 
in  the  transfer  of  industry  from  the  small- 
scale  production  of  handicraft  days  to  the 
grand-scale  production  of  the  power-machine: 


108     THE  POLITICS  OF  INDUSTRY 

personal  creative  interest  in  the  product  and  a 
concern  for  maximum  output,  that  sense  of 
security  and  freedom  from  involuntary  de- 
pendence without  which  the  mind  cannot  be  free 
for  its  best  work,  and  justifiable  hope  of  the 
continuous  possibility  of  advance.  It  is  im- 
portant to  remember  that  these  effects  have 
been  produced  not  by  the  deliberate  bad  inten- 
tions of  individuals  with  a  corner  on  power,  but 
that  these  effects  are  inevitable  by-products  of 
the  transfer  from  an  industry  of  hand  produc- 
tion and  personal  relations  between  masters 
and  apprentices  to  an  industry  of  power-ma- 
chine production  and  impersonal  relations  be- 
tween employers  and  employees.  I  use  the 
word  inevitable  in  this  connection  without  pur- 
posing to  suggest  that  modern  industry  in  itself 
implies  of  necessity  the  destruction  of  the  crea- 
tive spirit  of  the  craftsman,  and  the  dimming  of 
the  sense  of  security,  independence,  and  hope; 
the  thing  that  made  the  destruction  of  these 
inevitable  in  modern  industry  was  the  fact  that 
when  industry  was  transferred  from  the  per- 
sonal small-scale  basis  to  the  impersonal  large- 
scale  basis,  the  administrative  brains  of  indus- 
try centered  exclusively  upon  the  mechanical 
problem  of  the  transfer  and  ignored  the  human 


THE  POLITICS  OF  INDUSTRY     109 

problem  involved.  That  was  left  to  shift  for 
itself.  And  the  instincts  of  self-defense  and 
self-interest,  rather  than  conscious  statesman- 
like administration,  have  dictated  and  devised 
the  policies  and  instruments  that  both  capital 
and  labor,  with  certain  heartening  exceptions, 
today  employ  in  dealing  with  the  issues  of  in- 
dustrial relations. 

Stripped  of  details  and  many  concurrent  is- 
sues, I  think  this  affords  a  fairly  adequate 
background  for  consideration  of  the  modern 
labor  problem.  At  least  it  gives  us  a  picture 
of  the  conditions  that  have  called  into  being 
the  policies  and  instruments  that  both  capital 
and  labor  now  use  to  maintain  and  advance 
their  respective  interests  and  rights. 

Now,  one  thing  lies  coiled  at  the  heart  of 
everything  I  have  pointed  out,  and  that  is  that 
in  the  transfer  from  hand  production  or  small- 
scale  industry  to  machine  production  or  large- 
scale  industry  the  worker  lost  control  of  the 
instruments  of  production,  lost  control  of  the 
raw  materials  for  production,  lost  control  of 
the  conditions  under  which  production  is  car- 
ried on,  lost  control  of  the  profits  arising  from 
production.  And  the  history  of  the  labor 
movement,  from  the  time  James  Watt,  in  1769, 


110     THE  POLITICS  OF  INDUSTRY 

harnessed  the  expansive  power  of  steam  to  hu- 
man use  and  made  possible  machine  production 
down  to  the  present,  has  been  the  story  of  la- 
bor 's  struggle  to  regain  the  fruits  if  not  the 
fact  of  that  lost  control.  To  the  cynical  and 
the  superficial  the  labor  movement  is  a  purely 
selfish  struggle  between  a  group  called  labor, 
trying  to  keep  wages  up,  and  a  group  called 
capital,  trying  to  keep  wages  down;  but  it  is 
essentially  a  competition  for  control,  with  a  rich 
variety  of  meanings  attached  to  that  word. 
Specific  demands  and  specific  strikes  for 
shorter  hours  and  higher  wages,  aside  from 
their  immediate  purpose,  are  part  of  this  larger 
movement  for  a  restoration  of  control,  even  in 
those  instances  where  the  leaders  of  such 
strikes  are  blind  to  the  relation  their  immediate 
action  bears  to  the  larger  movement. 

Before  the  entry  of  machine  production  and 
the  factory  system  the  workmen  exerted  a 
positive  control  over  industrial  processes  and 
industrial  relations.  Modern  industry  made 
and  still  makes  that  impossible.  Workmen 
turned,  therefore,  instinctively  to  the  attempted 
exercise  of  a  negative  control  over  industry,  at 
least  control  over  wages  and  conditions  of 
work.  Organized  labor,  collective  bargaining, 


THE  POLITICS  OF  INDUSTRY     111 

and  the  strike  are  methods  and  instruments 
that  have  been  evolved  out  of  this  attempt  at 
negative  control.  Capital  has,  of  course,  coun- 
tered with  similar  methods  and  instruments 
designed  to  meet  in  detail  the  procedure  of  la- 
bor. And  thus  the  stage  is  set  for  the  present 
relations  of  capital  and  labor,  with  the  excep- 
tion of  certain  happy  variations  which  need  not 
detain  our  analysis  at  this  point. 

The  present  system  of  regulating  the  rela- 
tions between  the  parties  to  industry  in  the  at- 
mosphere of  continuous  class  contest,  latent 
or  in  action,  from  the  public's  point  of  view 
falls  far  short  of  the  desirable.  From  the  point 
of  view  of  the  intelligent  self-interest  of  both 
capital  and  labor  it  is  a  costly  and  inadequate 
method  of  progress.  It  is  important  to  remem- 
ber, however,  that  this  system  was  never  de- 
liberately planned  as  a  desirable  method  of 
progress  either  by  capitalists  or  labor  leaders ; 
it  is  the  product  of  an  instinctive  evolution  un- 
der the  spur  of  self-defense  and  immediate  self- 
interest.  Nobody  chose  strikes  and  lock-outs 
as  statesmanlike  and  desirable  instruments  for 
the  effecting  of  social  advance.  They  have 
been  employed  because,  in  the  absence  of  indus- 
trial statesmanship,  no  other  methods  lay 


112     THE  POLITICS  OF  INDUSTRY 

readily  at  hand  with  which  workmen  might  ex- 
ercise some  measure  of  control  over  the  condi- 
tions and  reward  of  their  work,  and  with  which 
capital  might  resist  such  attempted  control  in 
toto  or  provide  against  its  running  the  full 
gamut  to  usurpation  or  expropriation.  But  the 
weakness  of  the  whole  round  of  partial  policies 
and  opportunist  methods  used  by  both  capital 
and  labor  at  present  lies  in  the  fact  that  they 
do  not  drive  directly  at  the  sustaining  cause  of 
the  conflict  between  capital  and  labor.  It  will 
clear  the  air  of  irrelevancies  to  review  briefly 
the  more  important  of  the  policies  and  instru- 
ments now  used  in  the  administration  of  indus- 
trial relations  and  to  attempt  to  assess  their 
value  as  an  ultimate  solution  or  a  fundamental 
contribution  toward  an  ultimate  solution  of  the 
labor  problem. 

Collective  bargaining,  as  we  have  seen,  is  one 
of  the  logical  products  of  the  attempt  of  labor 
to  exert  a  negative  control  over  industry  in 
place  of  the  positive  control  it  formerly  ex- 
ercised— a  gesture  of  self-defense  upon  the  part 
of  a  class  from  whom  former  weapons  of  pro- 
tection had  been  taken.  It  is  idle  to  rail  at  the 
use  of  collective  bargaining  in  the  absence  of  a 
pr  e^uallv  effective  method,  but  if  we 


THE  POLITICS  OF  INDUSTRY     113 

are  to  arrive  at  a  better  method  we  must 
visualize  the  essential  fault  of  collective  bar- 
gaining as  anything  approaching  a  solution  of 
the  problem  of  industrial  relations.  I  can  do 
no  better  at  this  point  than  to  quote  Alfred  E. 
Zimmern  on  collective  bargaining.  In  an  Ox- 
ford publication  entitled  "  Progress  and  His- 
tory" he  says: 

It  is  the  defect  of  the  wage  system,  as  Adam  Smith 
makes  clear  to  us,  that  it  lays  stress  on  just  those 
points  in  the  industrial  process  where  the  interests 
of  employers  and  workpeople  run  contrary  to  one  an- 
other, whilst  obscuring  those  far  more  important  as- 
pects in  which  they  are  partners  and  fellow-workers  in 
the  service  of  the  community.  This  defect  cannot  be 
overcome  by  strengthening  one  party  to  the  contract 
at  the  expense  of  the  other,  by  crushing  trade  unions 
or  dissolving  employers'  combinations,  or  even  T)y 
establishing  the  principle  of  collective  bargaining. 
It  can  only  be  overcome  by  the  recognition  on  both 
sides  that  industry  is  in  essence  not  a  matter  of  con- 
tract and  bargaining  at  all,  but  of  mutual  interde- 
pendence and  community  service;  and  by  the  growth 
of  a  new  ideal  of  status,  a  new  sense  of  professional 
pride  and  corporate  duty  and  self-respect  among  all 
who  are  engaged  in  the  same  function. 

And  in  one  of  Mr.  Zimmern 's  "Bound  Table " 
articles  he  further  states  regarding  collective 


114     THE  POLITICS  OF  INDUSTRY 

bargaining  this,  which  I  have  in  part  quoted  in 
an  earlier  paper  in  this  volume : 

Trade  Unions  and  Employers'  Associations  are 
necessary  parts  of  the  organization  of  a  modern  state, 
and  collective  bargaining  is  clearly  an  advance  on  the 
old  unequal  system  of  individual  wage-contracts. 
But  collective  bargaining  between  large-scale  organ- 
isations of  employers  and  workmen  involves  a  piling 
up  of  armaments  on  both  sides  not  unlike  that  of  the 
rival  European  groups  before  the  war.  At  its  best  it 
preserves  the  peace  by  establishing  a  precarious  bal- 
ance of  power ;  at  its  worst  it  precipitates  a  disastrous 
conflict ;  and,  in  either  case,  whether  it  works  well  or 
ill  for  the  moment,  it  is  non-moral  and  inhuman,  for 
it  has  no  basis  in  a  sense  of  common  service  or  pub- 
lic duty.  Hence  it  creates  a  feeling  of  divided  in- 
terest and  permanent  estrangement  which  has  been  all 
too  visible  to  the  rest  of  the  community  during  the 
recurring  industrial  crises  of  the  last  ten  years. 

It  is  quite  clear  that  collective  bargaining, 
however  necessary  it  may  be  in  the  absence 
of  a  better  method,  cannot  be  considered  as 
more  than  a  half-way  house  on  the  road  to  an 
ultimate  solution  of  the  problem  of  industrial 
relations. 

Respecting  strikes  little  need  be  said  beyond 
a  statement  of  the  fact  that  the  strike  is  frankly 
recognized  by  labor  as  an  emergency  instru- 


THE  POLITICS  OF  INDUSTRY     115 

ment  to  be  brought  into  use  when  other  avail- 
able means  of  influence  and  control  fail.  I  am 
not  concerned  here  with  the  complex  of  opinions 
regarding  the  use  and  abuse  of  the  strike;  I 
am  concerned  only  with  the  fact  that  not  even 
the  users  of  the  strike  regard  it  as  a  solution. 

Respecting  the  lock-out  and  the  injunction, 
which  are  counter  measures  that  capital  has 
used  in  meeting  or  anticipating  the  strike,  the 
same  may  be  said  as  has  just  been  said  regard- 
ing strikes.  No  capitalist  thinks  of  lock-outs 
or  injunctions  as  elements  of  a  solution;  they 
are  frankly  war  measures. 

Conciliation  likewise  falls  short  of  a  solu- 
tion. Conciliation  serves  an  invaluable  func- 
tion in  adjusting  differences  that  have  their 
rools  in  misunderstanding  of  policy  or  motive. 
The  record  of  conciliation  in  the  United  States, 
Great  Britain,  Canada,  New  Zealand,  and  Aus- 
tralia is  the  record  of  a  highly  valuable  method 
for  the  reduction  of  the  wastes  of  open  breaks 
between  the  parties  to  industry.  But  concilia- 
tion as  a  matter  of  fact  does  not  deal  with  root 
causes;  its  paramount  aim  is  industrial  peace, 
and  its  paramount  temptation  is  to  regard  in- 
dustrial peace  as  an  end  in  itself.  Too  fre- 
quently it  becomes  industrial  pacifism,  with  a 


116     THE  POLITICS  OF  INDUSTRY 

leaning  toward  peace  at  any  price.  Peace  at 
any  price,  when  an  issue  of  right  and  wrong 
is  at  stake  between  nations,  has  had  its  day  in 
court  and  the  popular  verdict  has  gone  against 
it.  Is  it  less  reprehensible  in  a  clean-cut  issue 
in  industrial  relations?  The  peace  which  con- 
ciliation too  frequently  has  in  mind  is  the  im- 
mediate peace  of  the  community  rather  than  a 
lasting  peace  between  capital  and  labor.  In- 
dustrial peace  and  international  peace  alike  are 
not  ends  in  themselves;  they  are  means  to  an 
end — the  end  of  freedom  and  self-respect.  It 
is  a  common-place  that  international  justice 
does  not  necessarily  flow  from  international 
peace,  but  contrariwise.  Just  so  social  justice 
is  not  a  by-product  of  industrial  peace,  but  the 
other  way  around.  Conciliation  is  a  valuable 
instrument  that  will  always  be  necessary,  re- 
gardless of  the  system  of  industrial  relations, 
but  it  is  not  a  solution. 

Arbitration  differs  from  conciliation  in  the 
fact  that  a  third  party  is  present  with  the  power 
to  balance  claims  and  evidence  and  pass  bind- 
ing judgment  thereon.  The  practical  weak- 
ness of  arbitration,  in  making  a  fundamental 
contribution  to  the  solution  of  vexed  industrial 
relations,  lies  in  the  difficulty  the  arbitrator 


THE  POLITICS  OF  INDUSTRY     117 

has  in  acting  upon  more  than  an  opportunist 
basis  of  judgment.  In  fact  the  average  arbitra- 
tor jockeys  the  parties  in  dispute  toward  the 
settlement  most  likely  to  be  accepted,  and  that 
makes  it  very  difficult  for  the  arbitrator  to  ar- 
rive at  a  decision  upon  the  basis  of  abstract 
justice.  He  must  perforce  balance  the  strength 
of  the  opposing  parties  and  reach  a  decision 
that  stands  a  good  chance  of  acceptance.  Fre- 
quently the  arbitral  award  is  accepted  because 
the  strength  of  one  of  the  parties  can  afford  to 
accept  it,  and  the  weakness  of  the  other  one 
of  the  parties  must  accept  it.  In  such  cases 
sullenness  follows  assent  and  real  industrial 
peace  is  not  advanced;  simply  one  crisis  is 
bridged  over.  Just  because  arbitration  has 
such  difficulty  in  arriving  at  a  decision  upon  the 
basis  of  justice,  there  is  always  the  possibility 
that  the  weaker  party  will  feel  justified  in 
flouting  the  decision  when  the  posture  of  affairs 
shifts  and  the  chance  for  a  more  advantageous 
settlement  seems  to  offer  itself.  We  have  not 
been  without  examples  in  this  country  when 
one  of  the  parties  to  industry  has  agreed  to 
arbitration  and  award  and  then  flouted  the  de- 
cision of  the  duly  constituted  tribunal.  As  a 
matter  of  ethics  that  is  indefensible.  It  is  use- 


118     THE  POLITICS  OF  INDUSTRY 

less  to  hope  for  ordered  progress,  if  we  cannot 
reckon  upon  the  sanctity  of  contract  and  agree- 
ment. But  getting  into  a  fever  about  isolated 
cases  of  broken  agreements  is  of  slight  use. 
Profanity  and  righteous  indignation  cannot 
take  the  place  of  intelligent  administration  of 
a  difficult  situation.  The  scientist  searching 
for  a  cure  for  tuberculosis  does  not  damn  the 
bacillus  under  his  microscope;  he  studies  it, 
learns  its  actions  and  effects,  and  attempts  to 
devise  a  remedy  or  preventive  against  it.  Just 
so  it  is  essential  that  we  recognize  the  limita- 
tions of  arbitration,  voluntary  or  compulsory, 
and  deal  with  the  causes  which,  rightly  or 
wrongly,  prompt  organized  groups  to  scout  the 
method  or  flout  the  award,  when  really  funda- 
mental issues  are  at  stake. 

Investigation  that  shall  insure  a  putting  of 
the  full  facts  before  the  public  in  a  labor  dis- 
pute, so  that  public  opinion  may  not  be  swayed 
either  by  demagogic  appeal  or  false  sympathy, 
is  a  salutary  method  always.  There  is  room 
for  a  wider  and  more  systematic  use  of  this 
agency.  As  W.  L.  Mackenzie  King  in  his  "In- 
dustry and  Humanity"  points  out: 

Investigation  is  useful  as  a  method,  and  imperative 
where  a  situation  is  intricate,  or  the  numbers  of  per- 


THE  POLITICS  OF  INDUSTRY     119 

sons  directly  or  indirectly  affected  are  considerable. 
Investigation  is  a  letting  in  of  light.  It  does  not  at- 
tempt to  award  punishments  or  to  affix  blame ;  it  aims 
simply  at  disclosing  facts.  Its  efficacy  lies  in  what 
it  presupposes  of  the  power  of  Truth  to  remedy  evil 
of  itself.  Its  use  is  a  high  tribute  to  human  nature, 
for  it  assumes  that  collective  opinion  will  approve  the 
right,  and  condemn  the  wrong.  Willingness  to  in- 
vestigate is  prima  facie  evidence  of  a  consciousness  of 
right.  In  the  absence  of  good  and  sufficient  reasons, 
refusal  to  permit  investigation  is  equally  prima  facie 
evidence  of  weakness  or  wrong.  So  powerful  is  In- 
vestigation as  a  means  of  inducing  right  behavior, 
that  authority  to  employ  this  method  at  any  or  all 
times  is  of  itself  protection  against  injustice.  The 
statutory  right  to  investigate  disputes,  which  some 
public  boards  enjoy,  has  been  found  sufficient  to  in- 
fluence parties  to  industrial  differences  to  settle  their 
controversies  both  voluntarily  and  speedily. 

Within  an  industry,  the  right  of  investigation  is 
usually  exercised  in  the  form  of  an  appeal  from  a 
subordinate  to  a  higher  authority.  All  such  rights  of 
appeal  are  guarantees  against  arbitrary  conduct  and 
unfair  dealing.  The  higher  the  right  of  appeal  may 
be  carried,  the  greater  the  safeguard.  To  make  this 
right  effective,  it  should  at  some  point  lie  wholly  be- 
yond influence  by  any  of  the  parties  in  interest. 

But  investigation  is,  of  course,  only  an  anti- 
septic. The  publicity  of  the  results  of  inves- 
tigation can  discourage,  drive  to  cover,  or  pre- 


120     THE  POLITICS  OF  INDUSTRY 

vent  manifest  injustice  and  unfairness  of  deal- 
ing that  public  opinion  plainly  would  not  toler- 
ate ;  but  investigation  is  negative  and  lacks  the 
character  of  positive  administration  which  is 
essential  in  any  adequate  dealing  with  indus- 
trial relations.  Conciliation,  arbitration,  and 
investigation  are  indispensable  instruments  of 
any  industrial  system,  but  they  may  not  be 
looked  upon  as  offering  adequate  machinery  for 
the  total  regulation  of  industrial  relations. 
They  deal  with  disputes  after  they  have  arisen ; 
but  industrial  peace  and  progress  require 
policies  and  machinery  that  will  deal  construc- 
tively with  the  conditions  out  of  which  disputes 
arise. 

Social  legislation  designed  to  create  a  sense 
of  security  against  unemployment,  accident, 
sickness,  old  age,  and  kindred  fears  of  labor 
realizes  its  immediate  aim,  the  increased  sense 
of  security,  but  does  not  seem  materially  to  les- 
sen the  vitality  of  the  labor  movement,  a  fact 
that  might  suggest  that  security  and  material 
safeguards  are  not  the  sum  and  substance  of 
labor's  aspiration.  Any  attempted  solution  or 
partial  solution  of  the  labor  problem  that  pro- 
ceeds upon  the  assumption  that  security  is  the 


goal  that  comprehends  the  whole  round  of  labor 
aims  is  assured  of  failure  Mr.  Zimmern,  from 
whose  illuminating  studies  of  the  problems  of 
industry  I  am  quoting  at  length  in  this  paper, 
touches  this  matter  in  a  pointed  analogy  drawn 
between  the  security  of  paternal  legislation  and 
the  security  of  feudalism.  He  says : 

It  is  constantly  being  said,  both  by  employers  and 
by  politicians,  and  even  by  writers  in  sympathy  with 
working-class  aspirations,  that  all  that  the  workman 
needs  in  his  life  is  security.  Give  him  work  under 
decent  conditions,  runs  the  argument,  with  reasonable 
security  of  tenure  and  adequate  guarantees  against 
sickness,  disablement,  and  unemployment,  and  all  will 
be  well.  This  theory  of  what  constitutes  industrial 
welfare  is,  of  course,  when  one  thinks  it  out,  some 
six  centuries  out  of  date.  It  embodies  the  ideal  of 
the  old  feudal  system,  but  without  the  personal  tie 
between  master  and  man  which  humanised  the  feudal 
relationship.  Feudalism  .  .  .  was  a  system  of  con- 
tract between  the  lord  and  the  laborer  by  which  the 
lord  and  master  ran  the  risks,  set  on  foot  the  enter- 
prises (chiefly  military),  and  enjoyed  the  spoils,  in- 
cidental to  mediaeval  life,  while  the  laborer  stuck  to 
his  work  and  received  security  and  protection  in  ex- 
change. Feudalism  broke  down  because  it  involved 
too  irksome  a  dependence,  because  it  was  found  to  be 
incompatible  with  the  personal  independence  which  is 
the  birthright  of  a  modern  man.  So  it  is  idle  to  ex- 


122     THE  POLITICS  OF  INDUSTRY 

pect  that  the  ideal  of  security  will  carry  us  very  far 
by  itself  towards  the  perfect  industrial  common- 
wealth. 

Welfare  work  instituted  and  carried  on  by 
employers  does  not  bring  us  any  nearer  a  solu- 
tion of  the  tangled  riddle  of  industrial  rela- 
tions. Percy  Stickney  Grant  in  his  "Fair  Play 
for  the  Workers,"  which  is  an  attempt  to 
state  the  workers'  point  of  view  regarding  the 
problems  centering  in  industrial  relations,  in- 
terprets the  workman's  attitude  toward  the 
welfare  work  of  employers  as  follows : 

The  newspaper-reading  public  and  conservative 
business  men,  when  confronted  by  the  labor  problem, 
are  often  confused  by  the  behavior  of  working-men 
toward  employers  famous  for  their  kindness.  Dur- 
ing the  Pullman  strike  it  was  hard  for  the  public  to 
understand  how  the  employees  of  the  company  could 
be  so  hostile  and  could  commit  acts  of  violence.  Had 
not  Mr.  Pullman  given  them  an  ideal  town  to  live  in, 
all  at  his  own  expense  ? 

.  .  .  The  working-man's  great  complaint  today  is 
his  helplessness,  and  it  is  perfectly  clear  that  what- 
ever increases  this  sense  of  helplessness  will  really  in- 
crease his  outcry.  Working-men  don't  like  to  have 
things  done  for  them.  The  more  that  is  done  for  them, 
the  more  they  feel  in  the  power  of  the  person  who  is 
responsible  even  for  their  benefits.  .  .  .  Paradoxically 
enough,  .  .  .  some  of  the  most  serious  explosions  of 


THE  POLITICS  OF  INDUSTRY     123 

indignation  have  taken  place  amid  the  fairest  environ- 
ment that  can  surround  the  conditions  of  toil.  .  .  . 
Working-men  say  that  if  corporations  can  afford 
these  extras,  these  adornments  and  additions  to  the 
comfort  of  their  people,  then  they  can  afford  to  give 
better  wages.  Of  the  two  methods  of  distributing  a 
surplus,  the  working-man  prefers  the  latter.  He 
would  rather  take  his  chances  in  an  ordinary  factory 
with  higher  pay  and  use  the  addition  to  his  income  as 
he  pleases. 

In  other  words,  the  working-man  realizes,  or,  at 
any  rate,  asserts,  that  he  himself  is  paying  for  the 
improved  tenements,  for  the  parks,  for  the  libraries, 
for  the  comforts  and  conveniences  of  the  superior  fac- 
tories, for  kindergartens,  for  lessons  in  cooking,  for 
lectures,  for  flower-gardens,  for  flower-boxes  outside 
the  windows,  for  baths,  etc.  While  he  is  meeting  the 
cost  of  these  advantages,  he  finds  the  world  at  large 
praising  his  employer  as  a  notable  philanthropist,  and 
in  his  heart  he  regards  this  as  a  sham.  At  all  events 
he  would  rather  be  his  own  philanthropist. 

I  have  quoted  this,  not  in  order  to  pass  per- 
sonal judgment  upon  the  justice  or  injustice  of 
the  working-man's  point  of  view  in  this  matter, 
but  to  indicate  that  welfare  work  offers  no  key 
to  the  riddle. 

Nor  does  profit-sharing  as  usually  adminis- 
tered offer  in  itself  a  solution  to  industrial  un- 
rest or  furnish  a  final  basis  for  cordial  indus- 


124     THE  POLITICS  OF  INDUSTRY 

trial  relations.  Profit-sharing,  when  its  full 
implications  are  worked  out,  may  come  nearer 
to  a  solution  than  any  of  the  matters  I  have 
mentioned,  but  I  have  here  in  mind  profit- 
sharing  as  normally  conducted.  Here  again 
let  me  summon  one  who,  from  wide  experience 
in  la*bor  matters,  can  speak  with  sureness  and 
authority.  W.  L.  Mackenzie  King,  in  his  vol- 
ume referred  to  earlier  in  this  paper,  says : 

As  the  term  "profit-sharing"  is  generally  used,  it 
means  the  distribution  among  wage-earners  of  part 
of  the  net  profits  of  an  undertaking.  Where  the  rate 
of  return  at  which  labor  is  rewarded  in  the  first  in- 
stance is  the  standard  rate,  so  that  the  share  which 
labor  receives  from  the  net  profits  is  in  no  sense  a 
restoration,  in  whole  or  in  part,  of  the  wages  it  should 
have  received  before  net  profits  were  estimated,  the  ob- 
jection of  labor  to  this  method  of  rewarding  effort 
is  in  large  measure  removed.  Often,  however,  in  esti- 
mating net  profits,  capital  and  management  are 
tempted  to  regard  the  remuneration  of  labor  as  an  item 
in  the  cost  of  production  to  be  kept  as  low  as  possible. 
It  is  hard  for  labor  to  believe  that  this  is  not  what  is 
generally  done,  and  to  understand  why,  if  extra  pay- 
ments are  available  in  the  form  of  dividends  out  of  net 
earnings,  they  should  not  be  as  readily  available  in 
the  form  of  higher  wages  at  the  outset.  .  .  . 

.  .  .  there  is  yet  another  ground  on  which  organized 
labor  fears  profit-sharing.  Trade-union  effort  to 


THE  POLITICS  OF  INDUSTRY     125 

raise  the  status  of  labor  seeks  reinforcement  from  a 
growing  belief  among  workers  in  the  solidarity  of 
labor.  Whatever  tends  to  weaken  or  destroy  the  class 
interest  is  apt  to  be  viewed  with  misgivings  as  likely 
to  lessen  the  possible  power  of  organization  as  a  whole. 
...  It  is  not  surprising,  therefore,  to  find  that,  where 
the  result  of  profit-sharing  is  genuinely  such  as  to  im- 
prove the  status,  and  not  merely  the  temporary  earn- 
ings, of  working-men,  labor's  opposition  to  profit-shar- 
ing has  not  only  been  silenced,  but  profit-sharing  has 
found  some  of  its  strongest  advocates  in  the  ranks  of 
trade  unionists. 

It  will  be  sufficient  to  mention  one  other 
policy  which,  despite  the  ambitious  claims 
made  in  its  behalf  by  its  partizans,  fails  to 
afford  a  basis  for  the  administration  of  indus- 
try mutually  satisfactory  to  capital  and  labor, 
and  that  is  scientific  management.  That  the 
labor-saving  devices  of  scientific  management 
represent  new  and  valuable  assets  to  produc- 
tion may  not  be  questioned.  It  is  the  reaction 
of  scientific  management  upon  the  worker  that 
presents  a  problem  which  the  advocates  of 
scientific  management  must  solve  before  the 
principle  can  gain  a  fundamental  foothold  in 
industry  with  the  full  assent  of  labor.  It  tends 
to  mechanize  the  worker.  It  centralizes  re- 
sponsibility for  initiative  in  the  scientific  man- 


126     THE  POLITICS  OF  INDUSTRY 

ager,  and  allots  to  the  worker  a  charted  action 
which  he  must  carry  out  with  economy  of  mo- 
tion. It  makes  the  worker  a  better  tool,  but 
a  poorer  craftsman.  It  pushes  the  specializa- 
tion of  modern  industry,  which  has  already 
created  a  problem  of  cramped  initiative,  still 
further.  It  makes  for  greater  centralization 
of  management.  It  is  met  with  open  hostility 
by  labor.  Labor  fears  that  the  rate  of  wage 
increase  under  scientific  management  will  not 
be  in  just  proportion  to  the  gains  of  capital; 
but  most  of  all  fears  a  weakened  status  as  the 
result  of  a  system  that  fully  worked  out  will 
have  a  diminishing  dependence  upon  exper- 
ienced workers.  Certain  scientific  managers 
assert  that  they  are  confident  they  could  place 
their  factory  upon  a  paying  basis  within  three 
months  in  the  event  they  lost  their  entire  work- 
ing force  except  the  staff  of  managers  and  the 
minimum  number  necessary  to  maintain  the 
organization  and  were  obliged  to  begin  again 
with  green  hands.  It  is  quite  clear  that  •scien- 
tific management,  if  it  is  not  to  be  a  disruptive 
factor  in  the  labor  situation,  must  be  installed 
with  the  consent  and  cooperation  of  labor.  La- 
bor will  never  consent  to  the  extreme  forms  of 
scientific  management  that  turn  a  man  into  a 


machine.  Far  from  being  a  solution  of  the 
central  problem  of  the  control  of  industry,  the 
very  proposal  of  scientific  management  makes 
acute  the  issue  of  labor's  desire  for  a  greater 
share  in  the  control  of  the  processes  and  profits 
of  industry. 

At  the  end  of  this  survey  of  some  of  the  out- 
standing policies,  methods,  and  instruments 
used  or  proposed  for  the  administration  of  in- 
dustry— collective  bargaining,  strikes,  lock- 
outs, injunctions,  conciliation,  arbitration,  in- 
vestigation, social  legislation,  welfare  work, 
profit-sharing,  and  scientific  management — the 
thing  that  stands  clear  is  that  no  one,  or  all  of 
these  combined  will  succeed  in  shifting  the  ad- 
ministration of  industrial  relations  from  the 
present  balance  of  power  basis.  These  cannot 
be  considered  as  solutions;  they  fail  to  touch 
the  ultimate  labor  issue — the  status  of  the 
worker  in  industry,  and  his  relation  to  the  con- 
trol of  industry.  Unless  the  question  of  the 
workers'  relation  to  the  control  of  industry  is 
cleared  up  by  constructive  thought  and  action 
in  which  capital  shares,  there  is  a  very  definite 
possibility  that  the  labor  movement  will  be  cap- 
tured by  the  extreme  wing  of  labor  thought 
which  desires  the  overthrow  of  the  present  sys- 


128     THE  POLITICS  OF  INDUSTRY 

tern  of  privately  owned  industry  and  the  pass- 
ing of  control  fully  into  the  hands  of  the  work- 
ers. 

The  adherents  to  the  present  order  of  pri- 
vately owned  industries  are,  therefore,  chal- 
lenged to  join  in  a  fresh,  unprejudiced,  and 
thorough  attempt  to  find  whether  there  can  be 
devised  methods  of  association  between  capital 
and  labor  that  will  satisfy  the  legitimate  aspira- 
tions that  lie  at  the  heart  of  the  present  world- 
wide unrest,  guarantee  orderly  progress,  and 
keep  industry  a  going  concern.  Now,  I  have 
not  built  the  arguments  of  this  paper  to  this 
point  in  order  to  launch  a  personal  theory,  but 
to  report  what  some  of  the  best  minds  of  both 
capital  and  labor  are  thinking  and  saying  re- 
garding the  way  out. 

We  have  seen  that  the  fundamental  weakness 
of  past  attempts  to  bring  industrial  relations 
to  a  state  of  harmony  and  efficiency  has  been 
that  industrial  relations  have  been  looked  upon 
as  a  problem  of  bargaining  between  competing 
groups  instead  of  a  problem  of  government  by 
collaborating  groups.  Industrial  relations  in 
handicraft  days  presented  a  problem  of  adjust- 
ment between  individuals.  Industrial  relations 
under  modern  grand-scale  production  present  a 


THE  POLITICS  OF  INDUSTRY     129 

problem  of  adjustment  between  groups  highly 
organized.  The  former  was  a  problem  of  bar- 
gaining ;  the  latter  is  a  problem  of  government. 
To  the  present,  however,  we  have  persisted  in 
an  attempt  to  handle  the  new  problem  with  the 
old  technique.  It  was  useless  to  hope  for  any 
constructive  treatment  of  the  problem  of  indus- 
trial relations  until  the  leaders  of  business,  of 
industry,  and  of  labor  visualized  the  modern 
labor  problem  for  what  it  is — a  problem  of  per- 
manent government  rather  than  periodic  bar- 
gaining. Today  there  is  on  all  hands  through- 
out business  circles  a  clear  recognition  that  only 
by  a  frank  facing  and  constructive  treatment 
of  the  problem  of  government  in  industry  can 
industrial  peace  be  secured.  I  want  now  to 
present  the  conception  of  the  labor  problem 
that  is  assuming  a  gratifying  distinctness  in 
the  minds  of  responsible  leaders  of  business, 
industry,  and  labor;  and  to  follow  the  state- 
ment of  this  conception  with  a  statement  of  the 
machinery  and  organization  which  is  being  pro- 
posed for  the  handling  of  industrial  relations 
upon  the  basis  of  definitely  organized  govern- 
ment in  industry. 

I  find  myself  again  turning  to  Mr.  Zimmern 
for  the  clearest  available  statement  of  the  new 


130     THE  POLITICS  OF  INDUSTRY 

conception  of  the  labor  problem  as  it  is  taking 
definite  form  in  the  minds  of  the  leaders  of 
British  industry  particularly.  His  statement 
may  be  taken  as  accurately  interpretive  of  a 
growing  body  of  British  opinion.  In  a  chapter 
on  "The  Control  of  Industry,"  in  his  volume 
on  "Nationality  and  Government,"  he  says: 

Industry  and  politics  are  two  very  closely  related 
functions.  The  object  of  politics  or  government  is 
to  carry  on  the  public  business  of  the  community;  to 
pass  the  laws  and  make  the  administrative  arrange- 
ments which  are  needed  in  the  interests  of  the  com- 
munity as  a  whole.  The  object  of  trade  and  industry 
is  very  similar.  It  is  to  serve  the  needs  of  the  com- 
munity; to  provide  the  goods  and  services  which  are 
necessary  to  its  existence  and  well-being.  It  is,  there- 
fore, not  at  all  surprising  that  the  same  standard 
should  tend  to  be  adopted  in  both,  and  that  that  stand- 
ard should  conform  to  the  general  view  of  life  in 
vogue  in  the  country.  .  .  . 

But  industry  and  politics  do  not  resemble  one  an- 
other only  in  their  objects.  They  resemble  one  an- 
other also  in  their  methods.  Both  have  certain  work 
to  get  done  for  the  community,  and  in  both  cases  the 
question  arises  how  that  work  shall  be  organized. 
Both  industry  and  politics  are  faced  by  what  in 
politics  is  called  the  constitutional  problem  and  in 
industry  the  problem  of  management.  ...  In  politics, 
so  far  as  this  and  most  Western  countries  are  con- 
cerned, this  problem  has  been  decided  in  favor  of 


THE  POLITICS  OF  INDUSTRY     131 

democracy.  ...  In  industry,  however,  the  problem  of 
management  is  still  unsolved,  or  rather  it  has  hitherto 
been  decided  in  a  direction  adverse  to  democracy. 
.  .  .  The  problem  of  management,  what  I  would  call 
the  constitutional  problem  in  industry,  the  question 
as  to  how  the  industrial  process  shall  be  controlled,  is 
already,  and  is  likely  to  continue,  the  burning  issue  in 
industrial  policy. 

Industrial  democracy  .  .  .  does  not  mean  handing 
over  the  control  of  matters  requiring  expert  knowl- 
edge to  a  mass  of  people  who  are  not  equipped  with 
that  knowledge.  Under  any  system  of  management 
there  must  be  division  of  labor;  there  must  be  those 
who  know  all  about  one  subject  and  are  best  fitted  to 
deal  with  it.  Democracy  can  be  just  as  successful  as 
any  other  form  of  government  in  employing  experts. 
Nor  does  democratic  control,  in  the  present  stage  at 
any  rate,  involve  a  demand  for  control  over  what 
may  be  called  the  commercial  side  of  management — 
the  buying  of  the  raw  material,  the  selling  of  the  fin- 
ished article,  and  all  the  exercise  of  trained  judgment 
and  experience  that  are  brought  to  bear  by  business 
men  on  these  questions  ...  at  present  at  any  rate 
the  workers'  demand  for  democratic  control  is  not  a 
demand  for  a  voice  in  the  business,  but  for  control 
over  the  conditions  under  which  their  own  daily  work 
is  done.  It  is  a  demand  for  control  over  one  side, 
but  that  the  most  important  side  because  it  is  the 
human  side,  of  the  industrial  process. 

Elsewhere  he  summarizes  his  thesis  by  say- 
ing that  between  the  extreme  forms  of  state 


132     THE  POLITICS  OF  INDUSTRY 

socialism  and  the  extreme  forms  of  private 
capitalism  there  exists  an  intermediate  region 
of  industrial  self-government. 

All  this  might  be  readily  dismissed  or  lis- 
tened to  with  a  tolerant  courtesy  were  it  simply 
a  publicist's  notion;  but  in  England  this  con- 
ception of  the  labor  problem  has  given  rise  to 
a  definite  program  that  is  supported  by  many 
of  the  most  responsible  and  conservative  lead- 
ers of  business  and  industry,  and  that  the  gov- 
ernment has  adopted  as  an  official  policy  and 
made  a  measure  of  practical  politics.  An  il- 
luminating and  abundant  literature  has  grown 
up  in  this  field,  an  interpretive  digest  of  which 
would  afford  effective  stimulation  to  American 
thought  upon  the  problem  of  industrial  rela- 
tions. Instead  of  attempting  that,  however,  I 
desire  to  treat  here  of  the  one  official  documen- 
tary formulation  of  the  proposal  for  industrial 
government  which  has  served  to  crystallize 
English  opinion  and  afford  a  basis  for  practical 
action — the  Whitley  Report. 

A  committee  of  expert  students  of  industrial 
relations,  under  the  chairmanship  of  the  Right 
Honorable  J.  H.  Whitley,  M.  P.,  Chairman  of 
Committees  of  the  House  of  Commons,  was  ap- 
pointed in  1917.  The  terms  of  reference  to  the 


THE  POLITICS  OF  INDUSTRY     133 

Committee  on  Relations  between  Employers 
and  Employed,  as  the  Whitley  committee  was 
called,  were: 

1.  To   make   and   consider   suggestions   for 
securing  a  permanent  improvement  in  the  rela- 
tions between  employers  and  workmen. 

2.  To  recommend  means  for  securing  that 
industrial  conditions  affecting  the  relations  be- 
tween employers  and  workmen  shall  be  sys- 
tematically reviewed  by  those  concerned,  with 
a  view  to  improving  conditions  in  the  future. 

With  all  promptness  consistent  with  thor- 
oughness the  committee  prosecuted  its  investi- 
gations and  formulated  its  suggestions  which 
appear  in  the  First  (interim)  Report  on  Joint 
Standing  Industrial  Councils,  under  date  of 
March  8, 1917,  together  with  three  later  reports 
representing  supplementary  and  more  detailed 
considerations.  The  report  gives  plain  evi- 
dence of  certain  general  considerations  that 
dictated  the  specific  suggestions  it  makes.  It 
will  be  of  value  to  indicate  these  general  con- 
siderations. 

The  report  is  based  upon  the  assumption 
that  the  most  workable  solution  of  the  prob- 
lems arising  out  of  industrial  relations  is  likely 
to  come  from  the  voluntary  cooperative  action 


134     THE  POLITICS  OF  INDUSTRY 

of  employers  and  employees  rather  than  from 
the  arbitrary  imposition  of  government  regula- 
tions; that  the  system  of  industrial  relations 
springing  from  such  a  voluntary  collaboration, 
as  the  faithful  expression  of  joint  thought  and 
agreement,  will  be  more  likely  to  prove  per- 
manent and  effective  than  an  even  better  sys- 
tem shoved  down  over  recalcitrant  groups  by 
executive  order.  This  is  clearly  expressed  in 
a  letter,  under  date  of  October  20,  1917,  that 
the  Minister  of  Labor  addressed  to  Employers' 
Associations  and  Trade  Unions.  In  answer- 
ing certain  questions  raised  in  communications 
to  the  Ministry  of  Labor,  he  said: 

Fears  have  been  expressed  that  the  proposal  to  set 
up  Industrial  Councils  indicates  an  intention  to  in- 
troduce an  element  of  State  interference  which  has 
hitherto  not  existed  in  industry.  This  is  not  the  case. 
The  formation  and  constitution  of  the  Councils  must 
be  principally  the  work  of  the  industries  themselves 
.  .  .  the  success  of  the  scheme  must  depend  upon  a 
general  agreement  among  the  various  organizations 
within  a  given  industry  and  a  clearly  expressed  de- 
mand for  the  creation  of  a  Council. 

This  matter  of  self-solution  of  the  problems 
of  industrial  relations  by  the  two  active  parties 
to  industry  as  contrasted  with  state  regulation 


THE  POLITICS  OF  INDUSTRY     135 

is  emphasised  in  the  report  itself.  Since  that 
issue  may  become  acute  in  the  United  States, 
it  is  worth-while  to  reproduce  the  reference 
the  report  makes.  The  report  states: 

It  has  been  suggested  that  means  must  be  devised 
to  safeguard  the  interests  of  the  community  against 
possible  action  of  an  anti-social  character  on  the  part 
of  the  Councils.  We  have,  however,  here  assumed 
that  the  Councils,  in  their  work  of  promoting  the  in- 
terests of  their  own  industries,  will  have  regard  for 
the  national  interest.  If  they  fulfil  their  functions, 
they  will  be  the  best  builders  of  national  prosperity. 
The  State  never  parts  with  its  inherent  over-riding 
power,  but  such  power  may  be  least  needed  when 
least  obtruded. 

The  report  is  further  based  upon  the  assump- 
tion that  a  satisfactory  system  of  industrial  re- 
lations can  be  more  easily  created  and  more 
effectively  administered  if  there  is  complete 
and  coherent  organization  of  both  employers 
and  employees  in  all  industries.  On  this  point 
the  report  reads : 

An  essential  condition  of  securing  a  permanent  im- 
provement in  the  relations  between  employers  and  em- 
ployed is  that  there  should  be  adequate  organization 
on  the  part  of  both  employers  and  workpeople.  The 
proposals  outlined  for  joint  cooperation  throughout 
the  several  industries  depend  for  their  ultimate  sue- 


136     THE  POLITICS  OF  INDUSTRY 

cess  upon  there  being  such  organization  on  both  sides ; 
and  such  organization  is  necessary  also  to  provide 
means  whereby  the  arrangements  and  agreements 
made  for  the  industry  may  be  effectively  carried  out. 

It  is  interesting  to  see  big  business  men  in 
England  arguing  for  the  complete  organization 
of  labor,  in  view  of  the  pronounced  attitude  of 
many  American  business  men  in  this  matter. 

A  further  assumption  underlying  the  report 
is  that  there  is  imperative  need  for  machinery 
that  will  bring  employers  and  employees  to- 
gether for  continuous  consultation  upon  mat- 
ters of  mutual  concern  other  than  matters  in 
dispute;  that  there  is  a  serious  gap  in  an  in- 
dustrial organization  that  provides  for  con- 
ference only  when  one  of  the  parties  has  a 
grievance.  On  this  point  the  report  states: 

The  schemes  recommended  in  this  report  are  in- 
tended not  merely  for  the  treatment  of  industrial 
problems  when  they  have  become  acute,  but  also,  and 
more  especially,  to  prevent  their  becoming  acute. 
We  believe  that  regular  meetings  to  discuss  indus- 
trial questions,  apart  from  and  prior  to  any  differ- 
ences with  regard  to  them  that  may  have  begun  to 
cause  friction,  will  materially  reduce  the  number  of 
occasions  on  which,  in  the  view  of  either  employers 
or  employed,  it  is  necessary  to  contemplate  recourse 
to  a  stoppage  of  work. 


THE  POLITICS  OF  INDUSTRY     137 

The  general  idea  that  permeates  the  whole 
report  is  that  industrial  peace  and  efficiency  de- 
mand candid  and  constructive  treatment  of 
the  fundamental  aspiration  of  labor,  which 
promises  to  be  voiced  with  increasing  vitality, 
for  a  greater  influence  and  control  over  those 
parts  and  processes  of  industry  that  most 
vitally  touch  the  workmen's  interests.  It  is  re- 
freshing to  see  the  framers  of  this  report  go 
past  the  inadequate  expedients  referred  to 
earlier  in  this  paper  and  drive  directly  at  the 
heart  of  the  labor  problem,  although  extremists 
contend  that  they  betray  but  a  Platonic  inter- 
est in  the  full  implications  of  the  workman's 
interest  in  actual  joint  control.  But  the  fram- 
ers frankly  state  their  convictions  on  this  point 
in  a  manner  that  indicates  a  healthy  apprecia- 
tion that  the  questions  of  status  and  control  un- 
derlie the  more  material  issues  of  wages  and 
hours.  On  this  point  the  report  reads : 

We  have  thought  it  well  to  refrain  from  making 
suggestions  or  offering  opinions  with  regard  to  such 
matters  as  profit-sharing,  co-partnership,  or  particular 
systems  of  wages,  etc.  .  .  .  We  are  convinced  .  .  . 
that  a  permanent  improvement  in  the  relations  be- 
tween employers  and  employed  must  be  founded  upon 
something  other  than  a  cash  basis.  What  is  wanted 


138     THE  POLITICS  OF  INDUSTRY 

is  that  the  work-people  should  have  a  greater  oppor- 
tunity of  participating  in  the  discussion  about  and 
adjustment  of  those  parts  of  industry  by  which  they 
are  most  affected. 

The  Whitley  report,  then,  is  based  upon 
these  four  general  considerations:  (1)  the  self- 
administration  of  industry  rather  than  govern- 
mental regulations;  (2)  the  complete  and  co- 
herent organization  of  both  employers  and  em- 
ployed in  all  industries;  (3)  continuous  con- 
sultation instead  of  intermittent  parleys,  with 
the  view  to  removing  the  causes  as  well  as  ad- 
justing the  issues  of  disputes ;  (4)  the  securing 
to  the  workmen  a  larger  voice  in  the  control 
of  those  parts  of  industry  by  which  they  are 
most  affected. 

The  machinery  proposed  by  the  Whitley  re- 
port is  designed  to  meet,  in  its  requirements  and 
working,  the  four  general  considerations  just 
summarized.  The  report  suggests  as  desir- 
able three  units  of  organization,  as  follows : 

(1)  National  Industrial  Councils; 

(2)  District  Industrial  Councils ; 

(3)  Local  Works  Industrial  Councils. 

This  triple  organization  of  national,  district, 
and  work-shop  bodies  is  designed  for  applica- 
tion to  each  industry  separately.  The  scheme 


THE  POLITICS  OF  INDUSTRY     139 

looks  upon  a  factory  as  an  industrial  commun- 
ity requiring  government,  just  as  a  municipal- 
ity requires  the  forms  and  functions  of  a  gov- 
ernment. Unless  the  analogy  is  pushed  too  far, 
it  may  be  said  that  the  plan  divides  industrial 
government  roughly  along  the  lines  that  in  the 
United  States  divide  municipal,  state,  and  fed- 
eral government.  Each  of  these  bodies  is  com- 
posed of  a  joint  membership  of  employers  and 
employed,  is  to  meet  regularly,  and  is  to  as- 
sume constructive  as  well  as  conciliatory  func- 
tions. The  report  sedulously  avoids  the  ap- 
pearance of  any  attempt  to  impose  a  finished 
system  upon  all  industries ;  it  makes  no  attempt 
at  a  rigid  standardization  of  forms,  leaving  the 
widest  latitude  of  choice  in  the  matter  of  the 
specific  forms  a  given  industry  shall  see  fit  to 
adopt. 

The  report  at  all  points  avoids  the  appear- 
ance of  a  comprehensive  analysis  or  complete 
recommendation ;  it  purposely  keeps  its  recom- 
mendations suggestive  merely.  This  appears 
in  its  recommendations  regarding  the  possible 
jurisdiction  of  these  joint  Councils.  A  discus- 
sion in  great  detail  of  the  questions  that  might 
come  under  the  jurisdiction  of  work-shop  com- 
mittees may  be  found  in  the  published  results 


140     THE  POLITICS  OP  INDUSTRY 

of  enquiries  arranged  by  the  section  of  eco- 
nomic science  and  statistics  of  the  British  As- 
sociation during  1916  and  1917.  The  results 
of  these  enquiries  appear  in  a  volume  entitled 
"Industry  and  Finance. "  I  do  not  purpose, 
however,  to  go  into  detailed  discussion  at  this 
point  on  the  jurisdiction  of  these  councils. 
That  may  better  be  reserved  for  a  later  paper, 
after  there  has  been  time  to  watch  the  councils 
in  operation  over  a  period  of  time  long  enough 
to  warrant  generalizations  that  may  afford 
some  guidance  to  American  thought  in  this 
field.  But  it  will  be  valuable  to  reproduce  at 
this  point  the  suggestions  of  the  Whitley  report 
which  states : 

Among  the  questions  with  which  it  is  suggested  that 
the  National  Councils  should  deal  or  allocate  to  Dis- 
trict Councils  or  "Works  Committees  the  following  may 
be  selected  for  special  mention : 

1.  The  better  utilization  of  the  practical  knowledge 
and  experience  of  the  workpeople. 

2.  Means  for  securing  to  the  workpeople  a  greater 
share  in  and  responsibility  for  the  determination  and 
observation  of  the  conditions  under  which  their  work 
is  carried  on. 

3.  The  settlement  of  the  general  principles  govern- 
ing   the    conditions    of    employment,    including    the 
methods  of  fixing,  paying,   and  readjusting  wages, 


THE  POLITICS  OF  INDUSTRY     141 

having  regard  to  the  need  for  securing  to  the  work- 
people a  share  in  the  increased  prosperity  of  the  in- 
dustry. 

4.  The  establishment  of  regular  methods  of  nego- 
tiating  for   issues   arising   between   employers   and 
workpeople,  with  a  view  both  to  the  prevention  of 
differences,  and  to  their  better  adjustment  when  they 
appear. 

5.  Means  of  ensuring  to  the  workpeople  the  great- 
est possible  security  of  earnings  and   employment, 
without  undue  restriction  upon  change  of  occupation 
or  employer. 

6.  Methods  of  fixing  and  adjusting  earnings,  piece- 
work prices,  etc.,  and  of  dealing  with  the  many  diffi- 
culties which  arise  with  regard  to  the  method  and 
amount  of  payment  apart  from  the  fixing  of  general 
standard  rates,  which  are  already  covered  by  para- 
graph three. 

7.  Technical  education  and  training. 

8.  Industrial  research  and  the  full  utilization  of  its 
results. 

9.  The  provision  of  facilities  for  the  full  considera- 
tion and  utilization  of  inventions  and  improvement 
designed  by  workpeople,  and  for  the  adequate  safe- 
guarding of  the  rights  of  the  designers  of  such  im- 
provements. 

10.  Improvements  of  processes,  machinery,  and  or- 
ganization and  appropriate  questions  relating  to  man- 
agement and  the  examination  of  industrial  experi- 
ments, with  special  reference  to  cooperation  in  carry- 
ing new  ideas  into  effect  and  full  consideration  of 


142     THE  POLITICS  OF  INDUSTRY 

the  workpeople's  point  of  view  in  relation  to  them. 
11.  Proposed  legislation  affecting  the  industry. 

I  have  taken  the  trouble  and  space  to  present 
this  analysis  of  the  Whitley  report  which 
stands  at  the  center  of  British  policy  with  re- 
gard to  the  labor  problem  and  social  unrest,  be- 
cause even  as  important  a  document  as  this  re- 
port is  slow  in  getting  to  our  reading  public. 
But  this  plan  will  doubtless  come  up  for  ex- 
tended consideration  in  the  United  States  as  we 
get  more  fully  into  our  reconstruction  difficul- 
ties, and  I  have,  therefore,  thought  it  important 
to  present  its  general  character  and  some  of  its 
implications  in  this  paper. 

We  should  keep  ourselves  free,  as  the  authors 
of  the  report  have  kept  themselves  free,  from 
the  delusion  that  this  proposal  is  a  panacea 
guaranteed  to  cure  all  industrial  ills.  It  is 
frankly  conceived  as  a  practically  possible  step 
that  will  take  us  a  little  farther  along  the  road 
of  reasonable  progress.  It  is  stoutly  opposed 
by  those  who  give  no  quarter  to  the  present  sys- 
ter  of  privately  owned  industry,  who  desire 
complete  ownership  and  operation  by  the  work- 
ers. G.  D.  H.  Cole,  the  belligerent  young  apos- 
tle of  the  Guild  movement,  states  this  attitude 
very  pointedly: 


THE  POLITICS  OF  INDUSTRY     143 

The  Whitley  report  .  .  .  only  regularizes  and 
formalizes  a  process  which  has  long  been  going  on 
in  most  of  our  principal  industries,  and  one  which 
would  have  continued  whether  there  had  been  a  Whit- 
ley  report  or  not.  In  fact,  the  control  of  industry 
cannot  be  altered  merely  by  the  setting  up  of  a  few 
Joint  Committees.  The  control  of  industry  rests  upon 
the  economic  power  of  those  who  control  it ;  and  only 
a  shifting  of  the  balance  of  economic  power  will  alter 
this  control. 

The  plan  is  also  opposed  by  those  who  fear 
that  regular  conferences  in  which  the  employ- 
ees would  talk  face  to  face  with  the  employers 
or  managers  would  tend  to  conservatize  the  em- 
ployees and  take  the  fighting  edge  off  the  labor 
movement.  Such  men  conceive  industry  as  a 
play  of  opposed  rather  than  common  interests. 
A  pointed  expression  of  this  point  of  view  is 
found  in  this  statement  made  by  Gilbert  K. 
Chesterton : 

My  immediate  advice  to  labor  would  be  to  stick 
to  its  strict  rights  of  combining  and  striking;  and 
certainly  not  to  sell  them  for  any  plausible  and  partial 
"participation"  in  management.  I  distrust  the  lat- 
ter because  it  is  in  line  with  the  whole  oligarchic 
strategy  by  which  democracy  has  been  defeated  in 
detail.  The  triumph  of  capitalism  has  practically 
consisted  in  granting  popular  control  in  such  small 
quantities  that  the  control  could  be  controlled.  It 


144     THE  POLITICS  OF  INDUSTRY 

is  also  founded  on  the  fact  that  a  man  who  can  be 
trusted  as  speaking  for  the  employees  often  cannot 
be  trusted  for  long  when  speaking  with  the  employers. 
He  can  carry  a  message,  especially  a  defiance;  but  if 
he  prolongs  a  parley,  it  may  degenerate  into  a  parlia- 
ment. The  parley  of  partners  would  be  lifelong ;  and 
I  fear  the  labor  partner  would  be  a  very  junior  part- 
ner. 

As  I  have  stated  earlier  in  this  paper,  the 
suggestions  of  the  Whitley  report  are  not  the 
last  word  in  industrial  relations.  The  value  of 
the  plan  lies  in  the  fact  that  its  acceptance  will 
establish  certain  fundamental  principles  with- 
out which  there  is  no  hope  of  escaping  from  the 
balance  of  power  system  of  industrial  relations. 
The  fundamental  principles  which  the  plan  es- 
tatflishes  may  «be  summarized  as  follows : 

1.  The  plan  is  based  upon  a  sound  conception 
of  what  the  ultimate  labor  issue  is — the  issue 
of  representative  government  in  industry. 

2.  The  plan  establishes  the  principle  of  con- 
ference between  equals. 

3.  The  plan  establishes  the  principle  of  equal 
representation  of  equally  strong  and  well  or- 
ganized forces. 

4.  The  plan  establishes  open  diplomacy  in 
business  as  a  counter-measure  to  the  suspicions 


THE  POLITICS  OF  INDUSTRY     145 

and  lack  of  confidence  that  mar  the  present  re- 
lations between  labor  and  capital. 

5.  The  plan  establishes  the  principle  of  leg- 
islation by  industry  for  industry. 

6.  The  plan  marks  the  beginnings  of  consti- 
tutionalism in  industry. 

There  are  two  equally  grave  dangers  in- 
volved in  the  consideration  of  this  question  of 
government  in  industry.  It  will  be  dangerous 
to  assume  that  labor  is  incapable  of  assuming 
joint  responsibility  in  the  larger  matters  of  in- 
dustrial policy  and  management.  With  labor 
articulate,  as  it  is  today,  that  will  prove  simply 
a  " sitting  on  the  lid"  policy  which  will  presage 
an  explosion.  It  will  be  equally  dangerous  to 
ignore  the  fact  that  men  need  training  in  the 
use  of  power,  and  push  the  organization  of  in- 
dustrial government  beyond  present  trained  ca- 
pacity in  the  ranks  and  leadership  of  labor. 

The  report  of  the  Whitley  committee  has  met 
with  serious  consideration  at  the  hands  of  all 
sorts  and  conditions  of  men  and  interests  be- 
cause there  is  a  growing  conviction  that  while 
in  the  past  society  has  constantly  been  re- 
minded of  its  duty  to  keep  a  condition  of  law 
and  order  in  social  relations  in  order  that  busi- 
ness and  industry  might  develop  unhampered, 


146     THE  POLITICS  OF  INDUSTRY 

the  time  has  now  come  for  the  community  to 
turn  to  industry  with  its  own  demand  reversed 
and  insist  that  industry  establish  within  its 
boundaries  such  law  and  order  as  will  permit 
society  to  develop  unhampered. 

An  effective  carrying  out  of  the  ideal  of  gov- 
ernment in  industry  will  react  favorably  upon 
the  quality  of  political  action  in  the  community. 
Critics  constantly  take  flings  at  the  political 
incapacity  of  the  average  citizen.  The  criti- 
cism has  a  basis  in  fact  that  will  remain  valid 
as  long  as  the  political  action  of  the  average 
voter  is  restricted  to  balloting  on  isolated  elec- 
tion days.  But  a  constrtutionalizing  -of  indus- 
try will  mean  a  turning  of  our  factories  into 
training  schools  that  will  develop  political  ca- 
pacity in  the  workman.  It  will  not  only  reduce 
friction  in  industrial  relations  but  will  make 
the  average  workman  a  better  citizen  and  a 
more  intelligent  voter. 

We  should  remember  that  the  proposal  of 
joint  control  in  industry  is  nothing  new.  It  is 
attempted  every  day.  Under  the  present  sys- 
tem of  effecting  a  control  of  industrial  relations 
by  governmental  regulation,  both  of  the  active 
parties  to  industry  attempt  to  control  the  pro- 
cesses of  legislation.  Capital  attempts  subtly 


THE  POLITICS  OF  INDUSTRY     147 

to  influence  legislation,  while  labor  now  and  then 
attempts  boldly  to  intimidate  legislators. 

The  advocates  of  the  Whitley  report  have 
wisely  pointed  out  that  the  representation  of 
labor  in  the  councils  of  industry  is  imperative 
not  because  management  is  unimportant,  but 
because  the  importance  of  management  is  so 
critical  that  it  is  essential  that  it  have  behind 
it  the  confidence  and  cooperation  of  all  who  are 
affected  by  it.  The  goodwill  of  a  factory's  la- 
bor force  is  certainly  as  vital  as  the  goodwill 
of  its  market.  The  manager  of  the  future  will 
see  the  need  of  the  sympathetic  support  of  the 
working  force,  and  realize  that  his  effectiveness, 
no  less  than  the  effectiveness  of  a  premier  and 
his  cabinet,  demands  the  ability  to  secure  a 
vote  of  confidence  when  a  critical  situation 
arises. 

Any  plan  that  might  be  proposed  for  a  more 
representative  government  in  industry  will  be 
distrusted  by  certain  employers  who  will  feel 
that  it  grants  too  much  power  to  the  workers, 
and  distrusted  also  by  certain  workers,  bent 
upon  Bolshevising  industry,  who  will  feel  that 
it  grants  too  little  power  to  the  workers.  But 
I  have  reported  in  this  paper  a  plan  that  has 
been  formulated  and  supported  by  careful 


148     THE  POLITICS  OF  INDUSTRY 

minded  men  who  have  attempted  to  study  dis- 
content with  the  same  dispassionate  spirit  in 
which  the  scientist  studies  disease.  It  is  prob- 
ably true  to  say  that  even  this  plan,  with  all  of 
its  limitations,  would  not  have  been  formulated 
at  this  time  save  for  the  existence  of  a  wide- 
spread and  settled  determination  in  the  ranks 
of  workmen  the  world  over  to  attain  a  greater 
voice  in  industry.  The  movement  toward  rep- 
resentative government  exists  in  industry  just 
as  it  has  existed  and  exists  in  politics.  The 
question  that  concerns  men  who  want  consistent 
and  orderly  progress  instead  of  revolution  is 
whether  the  King  Johns  of  business  and  indus- 
try will  collaborate  with  labor  or  take  an  atti- 
tude that  will  drive  labor  to  wrest  from  them 
by  revolutionary  methods  the  Magna  Charta 
of  a  new  order  in  industry. 

We  have  come  upon  a  time  when  blind  pre- 
judice and  the  closed  mind  are  suicidal.  I  have 
before  me  as  I  write  an  editorial  which  pur- 
ports to  analyze  the  current  unrest  and  point 
out  the  crux  of  the  labor  problem  in  the  United 
States.  It  is  a  perfect  expression  of  that  so- 
cial blindness  which  furnishes  dramatic  issues 
to  revolutionists.  The  editorial,  in  part,  says : 


THE  POLITICS  OF  INDUSTRY     149 

Our  country  would  be  contented  and  happy  if  it 
were  not  for  the  work  of  parasites,  theorists,  and 
weaklings,  mental  and  moral,  who  promote  unrest, 
discontent,  and  agitation  for  their  own  ends  and  pur- 
poses. Our  industrial  questions  are  not  serious  ex- 
cept in  the  fact  that  a  few  ambitious  self-seekers  and 
malcontents  make  an  issue  of  them,  distort  them,  lie 
about  them,  and  promote  discontent  by  misstatements 
and  promises  impossible  of  performance.  .  .  .  Our 
troubles  arise  from  a  toleration  of  pests.  .  .  . 

Now,  no  student  of  the  situation  will  deny 
the  existence  of  the  professional  malcontents 
described.  But  to  see  in  the  agitator  the  sole 
cause  of  a  problem  and  movement  that  girdles 
the  planet  is  plain  bankruptcy  of  intelligence. 

It  is  refreshing  to  throw  into  contrast  with 
that  sort  of  statement  the  statement  of  a  fine 
conservative  mind  like  that  of  Lord  Milner's. 
No  one  will  accuse  Milner  of  intellectual  reck- 
lessness, but  he  has  sensed  the  temper  of  his 
time  in  this  statement: 

It  may  be  said — using  the  word  in  no  party  sense — 
that  we  are  all  Radicals  today,  all  prepared  to  en- 
tertain, and  to  judge  dispassionately  on  their  merits, 
proposals  which  only  a  few  years  ago  would  have 
seemed  wildly  revolutionary  ...  we  all  recognize 
now  that  there  must  be  a  fresh  effort  of  economic  and 
social  organization. 


150     THE  POLITICS  OF  INDUSTRY 

Progress  will  be  orderly  to  just  the  degree 
that  responsible  leadership  brings  to  the  pres- 
ent situation  clear  perception  and  a  mediating 
ministry  of  guidance  into  such  new  policies  and 
new  organization  as  the  altered  conditions 
clearly  warrant  and  require. 


BUSINESS  STATESMANSHIP 

Decentralizing  statesmanship — Political  policemen  vs.  Busi- 
ness statesmen — Conservatives  and  radicals  join  forces 
against  political  bureaucracy — The  current  sets  against  the 
bureaucratic  state  and  the  Socialistic  state  for  same  reason 
— The  center  of  social  authority  shifts  from  politics  to 
industry — Making  the  invisible  government  visible  and 
socially  responsible — A  state  that  cannot  meet  an  emer- 
gency without  abdicating — Representative  government  lags 
behind  the  facts  of  modern  life — American  government  not 
designed  for  quick  response  to  public  will — Business  meets 
demands  of  awakened  labor  with  statesmanship  instead  of 
blind  antagonism — Business  democracy  vs.  business  au- 
tocracy— A  forecast — A  store  tries  self-government. 

THE  other  day,  in  glancing  over  a  series  of 
papers  I  had  written  on  certain  post-war 
tendencies,  I  discovered  myself  using,  with  a 
frequency  I  had  not  before  realized,  the  word 
"statesmanship"  in  all  sorts  of  connections — 
business  statesmanship,  industrial  statesman- 
ship, educational  statesmanship,  medical  states- 
manship, and  so  on.  There  is,  of  course,  noth- 
ing new  in  these  varied  adaptations  of  the  term. 
They  are  sprinkled  rather  freely  through  the 
liberal  literature  of  the  last  ten  years.  But 

151 


152     THE  POLITICS  OF  INDUSTRY 

seeing  such  a  variety  of  these  adaptations  of 
statesmanship  within  the  small  compass  of  one 
series  of  papers,  and  realizing  that  they  were 
there  not  from  any  unified  design  but  from  the 
separate  consideration  of  the  several  fields  of 
which  the  series  treats,  led  me  to  question 
whether  I  was  simply  falling  victim  to  a  cur- 
rent catch-word  and  indulging  in  the  easy  re- 
tailing of  a  young  platitude.  But  on  second 
thought  I  realized  that  I  had  been  reckoning, 
more  or  less  unconsciously,  with  an  actual  ten- 
dency of  our  time  toward  a  widening  and  redis- 
tribution of  the  functions  and  responsibilities 
of  statesmanship. 

Now,  if  it  is  true  that  many  of  the  functions 
and  responsibilities  commonly  credited  to  po- 
litical statesmanship  are  devolving,  or  clearly 
should  devolve,  upon  the  leadership  of  business, 
industry,  agriculture,  education,  medicine  and 
other  such  functional  fields  of  interest,  the  ad- 
ministration of  which  touch  with  a  most  inti- 
mate concern  the  daily  lives  of  all  of  us,  then 
that  fact  involves  on  the  one  hand  a  redefini- 
tion of  political  statesmanship,  and  on  the  other 
hand  plunges  the  leaders  of  business,  industry, 
agriculture,  education,  medicine  and  other  occu- 
pational fields  into  new  and  untried  adventures 


BUSINESS  STATESMANSHIP      153 

which  will  attach  to  the  position  of  all  such 
leaders  far-reaching  new  possibilities  of  per- 
sonal interest  and  social  significance. 

All  this  lies  so  closely  at  the  heart  of  those 
processes  of  readjustment  and  revaluation  into 
which  we  have  been  driven  by  the  war  and 
drawn  by  the  requirements  of  progress,  that  I 
have  seen  fit  to  conclude  this  series  of  papers 
by  making  certain  observations  upon  this  revo- 
lutionary, but  in  its  final  effects  soundly  con- 
servative, social  development  which  is  making 
for  a  decentralization  of  many  of  the  current 
functions  and  responsibilities  of  statesman- 
ship to  the  end  that  ultimately  every  process 
of  our  common  life  shall  be  administered  by 
those  who  know  most  about  it,  rather  than  by 
politicians  fitted  neither  on  the  basis  of  their  se- 
lection nor  by  their  fundamental  training  and 
outlook  for  such  responsibilities. 

There  is,  unless  I  am  far  afield  in  judgment, 
a  definite  new  recognition  of  modern  facts  and 
a  massing  of  tendencies  making  for  a  narrow- 
ing and  intensifying  of  the  field  and  operation 
of  statesmanship  at  Washington  and  our  sev- 
eral state  capitols  and  a  correlative  awakening 
and  widening  of  statesmanship  in  New  York, 
Pittsburgh,  Chicago,  Kansas  City,  San  Fran- 


154     THE  POLITICS  OF  INDUSTRY 

cisco,  and  the  other  significant  centers  of  Amer- 
ican life.  There  is  an  increasing  skepticism  of 
the  soundness  of  a  policy  under  which  political 
statesmanship  stands  on  the  outer  edge  of  busi- 
ness, industry,  agriculture,  education,  and 
other  social  functions  playing  the  role  of  police- 
man and  guardian  to  the  administration  of 
these  interests.  And  there  is  a  turning,  in  a 
spirit  of  critical  inquiry  and  hope,  toward  a 
policy  under  which  business  statesmanship  will 
stand  at  the  center  of  business,  industrial 
statesmanship  at  the  center  of  industry,  educa- 
tional statesmanship  at  the  center  of  education 
as  the  administration  itself  rather  than  an  out- 
side and  superimposed  force  ruling  and  regu- 
lating the  administration. 

It  is  not  strange  that  this  fresh  considera- 
tion of  a  policy  of  decentralization  should  ap- 
pear coincident  with  the  present  unprecedented 
concentration  of  economic  and  industrial  func- 
tions in  the  hands  of  government.  It  took  the 
excessive  war-induced  centralization  of  eco- 
nomic and  industrial  functions  in  the  hands  of 
government  to  dramatize  the  essential  fallacy 
of  trying  to  substitute  the  politician  for  the  en- 
gineer and  executive,  using  the  terms  engineer 
and  executive  rather  broadly  to  suggest  the 


BUSINESS  STATESMANSHIP     155 

men  functionally  fit  for  the  job  in  hand.  The 
experiences  of  great  centralization  in  govern- 
mental agencies  during  the  war,  both  here  and 
in  Europe,  have  convinced  a  growing  number 
that  handing  everything  over  to  the  state,  as 
now  organized,  to  be  run  by  the  state  simply 
does  not  and  will  not  work;  that  it  throws  the 
vital  processes  of  a  nation's  life,  particularly 
those  of  business  and  industry,  with  a  danger- 
ous certainty  into  the  hands  of  an  officialdom 
that  stands  too  far  removed  from  the  actual 
processes  to  know  them  with  that  intimacy  of 
touch  which  alone  can  insure  sanity  and  effi- 
ciency in  policy  and  action. 

That  too  great  political  interference  with  the 
vital  processes  of  a  nation  through  the  action 
of  an  ill-trained  and  amateur  bureaucracy  is 
fatal  to  an  effective  and  harmonious  common 
life  is  little  questioned.  And  by  one  of  those 
strange  paradoxes  of  history  both  ultra-con- 
servative and  highly  liberal  forces  are  joined 
in  blasting  at  the  foundations  of  such  a  policy 
— from  entirely  different  motives,  it  must  be 
granted.  On  the  one  hand,  certain  selfish  in- 
terests upon  which  the  government  has  been 
obliged  to  impose  conscience  and  a  social  sense, 
and  a  large  number  of  business  men  who  have 


156     THE  POLITICS  OF  INDUSTRY 

a  personal  sense  of  social  responsibility  and 
cannot  be  adjudged  profiteers  either  of  peace 
or  war  but  who  are  honestly  convinced  that  busi- 
ness and  industry  cannot  reach  its  maximum 
success  in  development  save  by  the  old  auto- 
cratic methods  of  control — all  these  are  openly 
warring  against  the  political  rule  of  business 
and  industry.  On  the  other  hand,  there  is  a 
party  of  constructive  liberalism,  equally  op- 
posed to  the  political  rule  of  business  and  in- 
dustry, made  up  of  forward-looking  business 
men  and  certain  creative  thinkers  in  the  fields 
of  political  and  economic  theory,  as  well  as  cer- 
tain elements  in  labor  leadership.  The  first 
group  desires  to  relax  the  political  grip  upon 
business  and  industry  so  that  they  may  go  back 
to  the  old  order  of  business.  The  second  group 
desires  a  decreasing  political  interference  with 
economic  processes  so  that  we  may  go  forward 
to  a  new  and  better  business  order.  Both 
groups  are  acting  upon  one  of  the  most  sound 
and  fruitful  ideas  of  modern  times — that  busi- 
ness must  be  governed  from  the  inside,  not 
from  the  outside.  And  that  fact  holds  true  of 
every  department  of  American  life,  for  every 
department  of  American  life  should  be  admin- 
istered by  those  who  touch  and  handle  the  stuff 


BUSINESS  STATESMANSHIP      157 

of  that  department  as  part  of  their  day's  work 
— government  by  those  who  know. 

That  a  large  part  of  political  interference 
with  economic  and  industrial  processes  has 
been  justified  in  the  past  by  the  fact  that  gov- 
ernment has  had  to  step  in  here  and  there  in 
order  to  introduce  a  needed  element  of  social 
control  in  given  situations  will  be  little  denied. 
But  the  point  is  that  we  are  now  coming  to  see 
that  society  is  not  confined  to  a  choice  between 
a  rampant  unsocial  individualism  on  the  one 
hand  and  an  inefficient  amateur  bureaucracy  on 
the  other.  We  are  coming  to  see  that  business 
and  industry  can  be  organized  upon  bases  that 
will  give  adequate  protection,  voice,  and  oppor- 
tunity to  all  classes  involved — the  employer, 
the  employee,  and  the  consuming  public — and 
increase  both  the  efficiency  and  profits  of  the 
undertakings.  And  it  is  toward  such  policies 
of  self-governing  business  and  industry  that 
the  best  minds  of  both  capital  and  labor  are 
turning  in  their  reaction  against  an  encroaching 
governmental  ownership,  control,  and  regula- 
tion which,  run  to  its  ultimate  application,  con- 
sists really  in  the  devising  of  policies  and  laws 
that  shall  mean  such  motherly  oversight  that 
business  and  industry  will  be  relieved  of  the 


158     THE  POLITICS  OF  INDUSTRY 

necessity  of  having  either  statesmanship  or 
conscience.  The  state  is  right  in  its  insistence 
that  business  and  industry  have  a  social  re- 
sponsibility; but  social  responsibility,  to  say 
nothing  of  that  high  efficiency  without  which  a 
sense  of  social  responsibility  is  only  a  pious 
and  abortive  emotion,  will  never  be  enforced 
by  the  political  policeman;  it  must  be  evolved 
by  the  business  and  industrial  statesman. 

It  is  just  such  problems  of  finding  and  ac- 
knowledging the  socially  right  and  sound  cen- 
ters of  authority  and  administration  that  have 
turned  the  liberal  intelligence  of  our  time 
toward  a  consideration  of  that  decentralization 
of  statesmanship  which  I  purpose  now  to  dis- 
cuss in  greater  detail.  It  should  be  said  in 
passing  that  the  same  set  of  facts  and  consid- 
erations that  is  bringing  about  a  reaction 
against  the  too  great  centralization  of  economic 
and  industrial  functions  in  the  hands  of  the 
state,  as  we  knew  it,  is  also  convincing  a  larger 
and  larger  number  of  its  former  adherents  that 
a  socialistic  state  would  likewise  drift  toward 
the  rocks  of  bureaucratic  unreality.  In  the 
light  of  the  high  specialization  and  complex  in- 
terdependence of  our  modern  industrialized  so- 
ciety, we  simply  do  not  dare  to  put  all  of  our 


BUSINESS  STATESMANSHIP      159 

eggs  in  one  basket,  whether  the  basket  is  car- 
ried by  a  bureaucratic  politician  or  an  auto- 
cratic business  executive.  It  certainly  is  too 
great  a  risk  to  make  the  efficiency,  justice,  and 
social  responsibility  of  our  complex  and  inter- 
related business  and  industrial  world  depend 
upon  the  policies  of  ever-changing  cabinets  and 
congresses,  still  less  upon  presidents  and 
premiers.  Benevolent  and  enlightened  pater- 
nalism is  a  comfortable  and  convenient  system 
when  and  while  it  works,  but  our  waiting-list  of 
supermen  is  not  long  enough  to  justify  our 
trusting  to  such  a  system.  The  consistent  and 
continuous  safety  and  efficiency  of  our  democ- 
racy demand  a  constant  broadening  of  the  base 
of  policy,  and  the  bringing  of  policy  more  and 
more  fully  into  the  hands  of  the  men  whose  au- 
thority is  intrinsic  by  virtue  of  their  being  the 
creative  conductors  of  those  real  enterprises 
that  constitute  our  common  life,  the  leaving  of 
fundamental  policies  less  and  less  to  fluctuating 
political  groups  brought  together  by  antiquated 
election  methods,  by  a  counting  of  noses  that 
too  frequently  fails  to  result  in  anything  ap- 
proaching an  effective  expression  of  the  will  of 
society. 
I  am  not  here  making  a  personal  plea.  I  am 


160     THE  POLITICS  OF  INDUSTRY 

reporting  and  trying  to  set  in  orderly  relation 
certain  elements  of  a  plea  for  a  more  realistic 
politics,  based  upon  government  by  those  who 
know  and  do,  as  I  have  found  scattered  frag- 
ments of  that  plea  upon  the  lips  of  business 
men,  labor  leaders,  lawyers,  and  educators 
within  the  last  few  months.  I  am  building  the 
underlying  arguments  of  this  paper  upon  defi- 
nite interviews,  printed  statements,  and  va- 
grant scraps  of  conversation  with  such  men. 
That  would  be  a  superficial  method  were  I  try- 
ing to  present  a  comprehensive  discussion  of 
some  political  or  economic  theory.  But,  in  do- 
ing this,  I  am  simply  holding  to  the  purpose 
which  I  set  for  these  papers  in  the  beginning — 
the  interpretive  reporting  of  the  most  signifi- 
cant drifts  of  opinion  among  the  men  and 
women  upon  whom  the  actual  responsibilities 
of  business,  industry,  education,  the  church, 
and  certain  of  the  professions  rest.  The  pur- 
pose of  these  papers  is  not  so  much  to  discuss 
the  most  forward-looking  theories  of  business, 
industry,  education,  and  so  on,  as  these  are  ad- 
vanced by  students  and  publicists,  as  to  give  a 
sort  of  moving  picture  of  the  minds  of  the  men 
and  women  who  are  doing  the  work  in  these 
fields.  In  the  measure  that  these  papers  sue- 


BUSINESS  STATESMANSHIP      161 

ceed  in  reaching  their  purpose  we  shall  be  able 
to  see  to  what  extent  the  theories  of  the  best 
students  of  these  matters  are  influencing  the 
men  of  action,  and  better  still  discover  what 
new  and  creative  ideas  are  being  evolved  out  of 
actual  experience  to  serve  as  the  raw  materials 
for  new  and  better  conceptions  of  the  function 
and  organization  of  these  several  fields  of  inter- 
est. 

I  am  aware  that  in  this  paper  I  am,  at  one 
point  and  another,  approaching  a  field  of  po- 
litical theory  which  has  been  ably  developed  by 
such  writers  as  Benoist,  Duguit,  Figgis,  Bar- 
ker, Laski  and  others  who,  either  as  part  of  an 
attempt  at  a  complete  philosophy  of  the  state 
or  in  discussions  of  particular  problems  of  in- 
dustry and  politics,  have  concerned  themselves 
with  the  unreality  of  a  representative  system 
of  government  under  which  the  only  basis  of 
representation  is  that  of  artificially  drawn  geo- 
graphical units,  and  with  the  possibilities  of 
governmental  reforms  that  would  determine 
representation  upon  the  basis  of  interests  and 
occupations  as  well.  Such  students  have 
blazed  and  are  blazing  a  path  toward  a  new 
and  more  realistic  politics.  But  I  am  not  con- 
cerned primarily  with  the  interpretation  of  any 


162     THE  POLITICS  OF  INDUSTRY 

theory  of  the  state  in  the  direction  of  which  the 
subject  matter  of  this  paper  may  look.  In  fact, 
I  am  not  approaching  the  problem  from  the 
angle  of  political  science  at  all,  but  from  the 
angle  of  business  and  industry,  in  an  attempt 
to  forecast,  upon  the  basis  of  present  and  go- 
ing facts,  what  developments  are  likely  to  oc- 
cur in  the  relation  of  government  to  business 
and  industry  and  in  the  internal  reordering  of 
the  administration  of  business  and  industry. 
We  may  find  that  the  political  pluralist  starting 
from  the  ground  of  theory  and  the  business  man 
starting  from  the  ground  of  practical  necessity, 
as  he  faces  the  present-day  labor  unrest  and  po- 
litical bureaucracy,  will  meet  in  agreement. 

I  think  I  have  suggested  with  sufficient  clear- 
ness that  in  many  quarters,  both  conservative 
and  radical,  a  definite  conviction  is  forming 
that  we  should  move  from  a  policy  of  govern- 
ment of  industry  by  the  state  toward  a  policy 
of  government  of  industry  by  industry.  I  have 
suggested  also  that  the  principle  involved  in 
this  conviction  has  a  much  wider  legitimate  ap- 
plication than  simply  its  application  to  indus- 
try. It  is  clear  that  among  the  adherents  to 
such  a  conviction  will  be  found  some  business 
men  and  captains  of  industry  who  support  the 


BUSINESS  STATESMANSHIP      163 

contention  for  individualistic,  selfish,  and  reac- 
tionary reasons,  men  who  chafe  at  any  and  ev- 
ery restraint  the  state  may  impose  upon  busi- 
ness. But  it  just  happens  that  this  movement 
toward  a  more  realistic,  more  just,  more  demo- 
cratic, and  more  efficient  organization  of  both 
industry  and  politics  serves  their  selfish  pur- 
pose in  the  negative  and  purposely  destructive 
phase  of  its  criticism.  But  forward-looking 
business  men,  labor  leaders,  and  the  whole  in- 
tellectual leadership  of  this  movement  toward 
self-governing  business  and  industry  and  a  de- 
creasing political  interference  with  industrial 
processes  may  accept  the  help  of  these  reac- 
tionaries in  the  criticism  and  defeat  of  the 
forces  making  for  the  political  rule  of  business 
and  industry,  and  then  courteously  part  com- 
pany with  them  when  the  hour  strikes  to  deter- 
mine the  new  alternative  policy,  when  they  en- 
ter the  positive  constructive  phase  of  the  move- 
ment. 

Disregarding,  then,  for  the  moment,  the  rea- 
sons that  lead  the  ultra-reactionaries  to  oppose 
the  entrance  of  the  state  into  business  and  in- 
dustrial activities,  what  are  the  basic  consider- 
ations that  are  drawing  so  many  men  of  action 
and  thinkers  of  diverse  interests  and  points  of 


164     THE  POLITICS  OF  INDUSTRY 

view  together  in  support  of  a  policy  of  decen- 
tralizing statesmanship,  of  self-determination 
and -self -government  for  business  and  industry? 
I  do  not  refer  to  the  conventional  battle  of  ar- 
guments regarding  the  relative  efficiency  or  in- 
efficiency of  governmental  or  private  ownership. 
I  am  thinking  of  the  deeper  considerations  that 
are  less  likely  to  be  colored  by  personal  and 
selfish  interests,  and  more  likely  to  spring  from 
disinterested  analysis.  These  considerations 
fall  roughly  into  two  classes:  first,  those  con- 
siderations arising  from  a  growing  feeling  that 
our  political  institutions  have  not  been  pro- 
gressively adapted  to  changing  conditions  in 
a  manner  to  make  them  effective  instruments 
to  express  and  serve  modern  industrialized  so- 
ciety as  they  were  to  express  and  serve  the  rel- 
atively simple  social  and  economic  organiza- 
tion of  our  country  at  its  beginning  when  any 
average  citizen  of  intelligence  and  honorable 
purpose  might  really  represent  competently 
the  interests  of  his  congressional  district  or 
state;  and,  second,  those  considerations  forced 
upon  business  and  industrial  leaders  by  the 
character  and  extent  of  the  present  labor  un- 
rest which  is  daily  making  it  more  evident  that 
compromise  and  concession  are  about  played 


BUSINESS  STATESMANSHIP      165 

out  and  that  some  new  approach  to  the  prob- 
lem of  the  government  and  control  of  industry 
must  be  made.  Let  us  look  at  some  of  the  con- 
siderations. 

For  one  thing,  many  are  saying  that  the  real 
center  of  authority  in  the  modern  world  has 
shifted  from  politics  to  business  anyway,  and 
that  the  rational  thing  to  do  is  to  recognize  the 
fact  and  set  to  work  at  the  organization  of  busi- 
ness and  industry  upon  a  basis  that  will  make 
them  socially  responsible  and  give  full  and  ef- 
fective recognition  to  all  classes  involved — cap- 
ital, labor,  and  the  community ;  that  if  business 
and  industry  have  become  the  dominant  factors 
in  modern  society,  constituting  a  sort  of  invis- 
ible government,  the  wisest  thing  to  do  is  to 
make  that  invisible  government  visible  and  so- 
cially responsible,  to  organize  these  economic 
forces  into  a  mainstay  instead  of  a  menace  to 
the  common  rights  and  interests  of  society. 
As  I  have  already  suggested,  this  point  of  view, 
arising  from  different  motives,  is  found  among 
both  conservatives  and  radicals.  This  matter 
was  aptly  stated  in  a  recent  issue  of  "The  Na- 
tion" which  said: 

The  framers  of  our  Federal  Constitution  could  not 
foresee  the  development  of  modern  industrialized  so- 


166     THE  POLITICS  OF  INDUSTRY 

ciety.  They  could  not  foresee  the  shifting  of  the  actual 
seat  of  government  from  executive  chambers  and  leg- 
islative halls  to  banks,  stock  exchanges,  schools,  and 
newspaper  offices.  .  .  .  The  real  rule  of  the  modern 
world — the  power  which  makes  or  breaks  a  nation, 
which  directs  the  creative  energies  of  a  culture,  which 
determines  the  development  and  destiny  of  a  people 
— is  vested  in  forms  economic  rather  than  political. 
These  constitute  the  invisible  government  which  lies 
behind  the  visible  government  of  the  old  political 
forms.  .  .  .  The  old  political  forms  remain  funda- 
mentally unchanged. 

Over  against  these  new  economic  forms,  exercising 
the  real  governmental  functions  of  modern  society, 
has  grown  in  the  industrial  field  a  system  of  organized 
check  and  protest,  the  invisible  opposition,  as  it  were. 
This  is  the  political  significance  of  the  organization  of 
the  workers  everywhere  during  the  rapid  rise  of  in- 
dustrialism; they  recognized  the  necessity  of  an  eco- 
nomic opposition,  the  inadequacy  of  the  old  political 
forms  to  furnish  a  proper  check  upon  the  new  gov- 
ernmental functions;  and  the  action  was  a  healthy 
sign  of  men's  political  sagacity.  For  the  past  fifty 
years  these  lines  have  been  deepening.  If  the  old 
political  forms  could  have  been  made  flexible  enough 
to  encompass  the  new  economic  order,  to  ride  the 
tidal  wave  of  industrialism,  all  would  have  been  well ; 
the  channels  of  political  activities  would  have  run 
smoothly,  the  workers  would  have  been  satisfied  with 
adequate  voice  and  representation  in  the  new  indus- 
trial functions  of  government,  the  community  instead 
of  a  special  class  would  have  profited,  and  the  great 


BUSINESS  STATESMANSHIP      167 

economic  war  would  not  have  descended  upon  our 
civilization.  But  those  in  control  were  too  selfish  or 
too  blind  to  render  the  political  machinery  flexible,  to 
make  the  invisible  government  the  visible  and  respon- 
sible government  .  .  .  and  thus  they  .  .  .  brought 
about  a  fatal  division  between  our  political  activities 
and  the  life  processes  of  our  society. 

The  line  of  thought  here  is  clearly  logical. 
If  business  and  industry  become  in  effect  the 
real  government  of  society,  and  if  political 
forms  are  not  adapted  to  reckon  with  this  fact 
and  are  therefore  ineffective  instruments  either 
for  expression  or  protection  alike  on  the  part 
of  capital  and  labor,  it  is  inevitable  that  both 
capital  and  labor  will  ultimately  resent  polit- 
ical control  and  turn  their  energies  either 
toward  a  reform  of  government  along  lines 
that  will  merge  the  actual  economic  rule  with 
political  forms  or  toward  the  development  of 
some  sort  of  business  and  industrial  self-gov- 
ernment. The  latter  seems  more  likely  to 
occur  than  the  former  in  the  United  States. 

Another  consideration  that  is  weakening  the 
faith  of  many  in  political  control  of  business 
and  industry  is  the  fact  that  we  do  not  pretend 
to  meet  the  heavy  demands  of  a  great  emer- 
gency, like  the  war,  with  our  normal  govern- 


168     THE  POLITICS  OF  INDUSTRY 

ment  polity  and  its  relation  to  business,  indus- 
try, agriculture,  education.  We  hurriedly  con- 
struct an  emergency  machine,  and  the  moment 
the  emergency,  the  war,  is  over,  everyone  is  im- 
patient to  shake  off  the  temporary  restraints. 
Now,  everyone  realizes  that  a  great  emergency 
like  the  war  through  which  we  have  just  passed 
will  always  involve  certain  emergency  organ- 
ization, certain  alterations  in  the  normal  ad- 
ministration of  the  state,  but  not  a  complete 
alteration  of  the  basis  of  life  and  government. 
And  there  is  a  growing  conviction  in  many  of 
our  best  conservative  minds  that  there  is  some- 
thing inherently  unsound  in  a  political  organ- 
ization, in  its  relation  to  the  social  and  eco- 
nomic forces  of  the  nation,  that  cannot  meet 
emergencies  without  a  fundamental  reorgani- 
zation of  itself.  Modern  wars  are  more  than 
fights  between  troops.  Modern  wars  are  strug- 
gles between  the  whole  round  of  the  creative 
powers  of  production  and  organization  of  rival 
nations  and  alliances.  A  nation's  army  is 
only  the  clenched  fist  of  its  factories  and 
farms.  We  have  just  been  through  a  costly 
demonstration  of  that  fact.  We  have  seen  that 
the  quiet  processes  of  production  can  be  as  bel- 
ligerent as  the  actions  of  a  submarine;  that  a 


BUSINESS  STATESMANSHIP      169 

Kansas  wheat  field  is  as  much  a  war  factor  as 
a  munitions  plant;  that  the  potato  growers 
of  Maine  are  as  essential  to  our  armies  as  the 
powder  manufacturers  of  Delaware.  Farm, 
factory,  and  firing  line  constitute  the  essential 
trilogy  of  war  power.  A  breakdown  of  any  one 
spells  defeat.  Fighting  power  is  essentially  a 
by-product  of  industrial  power.  Therefore, 
aside  from  the  drilling  of  troops,  the  determi- 
nation of  strategy,  and  certain  emergency  or- 
ganization that  will  always  be  necessary  in  war 
time,  the  governmental  and  industrial  organi- 
zation that  will  give  the  greatest  social  har- 
mony and  the  highest  production  in  peace  time 
is  the  best  possible  organization  for  war.  The 
way  we  were  obliged  to  scurry  about  in  search 
of  effective  policies  and  organization  to  meet 
the  demands  of  war  has  given  rise  to  a  whole 
new  critique  of  our  governmental  organization 
in  its  relation  to  business  and  industry  and  the 
other  vital  processes  of  our  national  life. 

Then,  too,  there  is  an  increasing  recognition 
of  the  fact  that  there  is  an  inevitable  tendency 
toward  unreality  in  a  system  that  elects  its  rep- 
resentatives solely  upon  the  basis  of  arbitrarily 
and  artificially  drawn  geographical  districts 
that  have  a  less  and  less  distinct  unity  of  in- 


tcrest  as  society  becomes  more  specialized  and 
industrialized.  This  does  not  spring  from  the- 
ory, although  there  is  a  growing  literature  on 
this  matter.  It  springs  from  a  facing  of  cer- 
tain clear  facts  of  modern  life  which  H.  G. 
Wells  has  stated  with  as  much  clearness  as  any 
other  writer.  In  an  essay  of  his  which  appears 
in  his  "  Social  Forces  in  England  and  America,*' 
he  says : 

The  ties  that  bind  men  to  place  are  being  severed ; 
we  are  in  the  beginning  of  a  new  phase  in  human  ex- 
perience. .  .  .  For  endless  ages  man  led  the  hunting 
life,  migrating  after  his  food,  camping,  homeless. 
.  .  .  Then  began  agriculture,  and  for  the  sake  of 
securer  food  man  tethered  himself  to  a  place.  The 
history  of  man's  progress  from  savagery  to  civiliza- 
tion is  essentially  a  story  of  settling  down.  It  began 
in  caves  and  shelters ;  it  culminates  in  a  wide  spectacle 
of  farms  and  peasant  villages,  and  little  towns  among 
the  farms.  .  .  .  The  enormous  majority  of  human  be- 
ings stayed  at  home  at  last;  from  the  cradle  to  the 
grave  they  lived,  married,  died  in  the  same  district, 
usually  in  the  same  village ;  and  to  that  condition,  law, 
custom,  habits,  morals  have  adapted  themselves.  .  .  . 
Now  .  .  .  this  astonishing  development  of  cheap, 
abundant,  swift  locomotion  which  we  have  seen  in  the 
last  seventy  years  .  .  .  dissolves  almost  all  the  reason 
and  necessity  why  men  should  go  on  living  perma- 


BUSINESS  STATESMANSHIP      171 

nently  in  any  one  place  or  rigidly  disciplined  to  one 
set  of  conditions  .  .  .  this  revolution  in  human  loco- 
motion that  brings  nearly  all  the  globe  within  a  few 
days  of  any  man  is  the  most  striking  aspect  of  the 
unfettering  again  of  the  old  restless,  wandering,  ad- 
venturous tendencies  in  man's  composition. 

We  are  off  the  chain  of  locality  for  good  and  all. 
.  .  .  People  have  hardly  begun  to  speculate  about  the 
consequences  of  the  return  of  humanity  from  a  closely 
tethered  to  a  migratory  existence.  .  .  .  Obviously 
these  great  forces  of  transport  are  already  straining 
against  the  limits  of  existing  political  areas. 

Mr.  Wells  is  here  dealing  only  with  the  po- 
litical implications  of  rapid  transportation, 
but  the  implications  he  outlines  later  in  this  es- 
say rest  not  only  upon  the  fact  that  in  modern 
times  a  man  can  move  himself  about  from  place 
to  place  and  from  job  to  job,  but  also  upon  tbe 
fact  that  in  modern  times  the  business  and  in- 
dustrial interests  of  almost  every  man,  whether 
he  is  capitalist  or  workman,  overrun  political 
boundaries  within  states  and  cross  the  fron- 
tiers of  the  state  itself.  In  other  words  the  area 
of  the  average  man's  interests  and  the  area  of 
his  congressional  district  or  state,  from  which 
his  political  representative  is  elected,  as  in  the 
United  States,  do  not  at  all  correspond.  Keep- 


172     THE  POLITICS  OF  INDUSTRY 

ing  this  fact,  as  well  as  the  fact  of  rapid  trans- 
portation, in  mind,  it  is  worth  while  to  quote 
further  from  Mr.  Wells'  statement: 

In  every  locality  .  .  .  countless  people  are  found 
delocalized,  uninterested  in  the  affairs  of  that  par- 
ticular locality.  ...  In  America  political  life,  espe- 
cially State  life  as  distinguished  from  national  po- 
litical life,  is  degraded  because  of  the  natural  and  in- 
evitable apathy  of  a  large  portion  of  the  population 
whose  interests  go  beyond  the  State. 

Politicians  and  statesmen,  being  the  last  people  in 
the  world  to  notice  what  is  going  on  in  it,  are  making 
no  attempt  whatever  to  readapt  this  hugely  growing 
floating  population  of  delocalized  people  to  the  public 
service.  .  .  .  Local  administration  falls  almost  en- 
tirely— and  the  decision  of  Imperial  (or  national)  af- 
fairs tends  more  and  more  to  fall — into  the  hands  of 
that  dwindling  and  unadventurous  moiety  which  sits 
tight  in  one  place  from  the  cradle  to  the  grave.  No 
one  has  yet  invented  any  method  for  the  political  ex- 
pression and  collective  direction  of  a  migratory  popu- 
lation. .  .  .  Here,  then,  is  a  curious  prospect,  the  pros- 
pect of  ...  a  floating  population  going  about  the 
world,  uprooted,  delocalized,  and  even,  it  may  be,  de- 
nationalized, with  wide  interests  and  wide  views,  de- 
veloping, no  doubt,  customs  and  habits  of  its  own,  a 
morality  of  its  own,  a  philosophy  of  its  own,  and  yet, 
from  the  point  of  view  of  current  politics  and  legisla- 
tion, unorganized  and  ineffective.  .  .  .  The  history  of 
the  immediate  future  will,  I  am  convinced,  be  very 


BUSINESS  STATESMANSHIP      173 

largely  the  history  of  the  conflict  of  the  needs  of  this 
new  population  with  the  institutions,  the  boundaries, 
the  laws,  prejudices,  and  deep-rooted  traditions  estab- 
lished during  the  home-keeping,  localized  era  of  man- 
kind's career. 

It  is  clear,  at  any  rate,  that  the  real  struggles 
that  cut  to  the  heart  of  our  modern  society  are 
more  and  more  struggles  between  interests 
rather  than  struggles  between  parties.  The 
cleavage  between  interests,  actual  or  believed, 
has  an  air  of  reality  and  permanence,  while 
the  cleavage  between  political  parties  is  a  shift- 
ing line  determined  from  election  to  election 
upon  a  basis  of  opportunism.  The  recognition 
that  present  political  forms  are  ill  adapted  to 
deal  with  such  social  and  economic  facts  as 
have  just  been  pointed  out  is  contributing 
greatly  toward  the  reaction  against  the  polit- 
ical rule  of  business  and  industrial  policy  and 
administration. 

But  even  though  it  were  feasible  to  get  a  gen- 
uine representation  of  vital  interests  by  a  sys- 
tem under  which  the  basis  of  representation  is 
the  geographical  area,  the  fact  remains  that  our 
political  institutions  are  not  designed  for  quick 
and  effective  response  to  the  will  of  their  con- 
stituencies. In  this  respect  the  British  govern- 


174     THE  POLITICS  OF  INDUSTRY 

ment  is  much  more  fully  responsive  to  and  con- 
trolled by  the  current  public  mind  than  our  own 
government.  The  members  of  our  legislative 
bodies  are  elected  part  at  one  time  and  part  at 
another.  And  for  that  reason  we  can  never 
say  that  a  particular  congress  is  the  creation 
of  the  public  mind  at  that  given  time.  Our 
President's  responsibility  to  our  popular  house 
in  no  wise  corresponds  to  the  responsibility  of 
the  English  Premier.  Our  President  creates 
a  cabinet  that  is  not  responsible  to  the  popular 
house  nor  in  any  specific  and  controllable  sense 
to  the  public  will.  The  line  of  cause  and  effect 
running  from  the  individual  citizen's  vote  to 
the  ultimate  policy  of  government  is  frequently 
obscure  and  difficult  to  trace.  And  all  this  con- 
tributes to  the  feeling  of  unreality  that  an  in- 
creasing number  feel  in  connection  with  much 
of  current  political  processes.  It  is  clear  that 
this,  too,  adds  to  the  reaction  against  too  great 
political  control  of  business  and  industry.  If 
we  are  to  trust  the  vital  life  processes  of  our 
national  life  in  the  hands  of  government,  we 
want  it  to  represent  a  highly  realistic  politics. 
These  are  some  of  the  fundamental  consider- 
ations that  enter  into  the  opinion  that  govern- 
mental ownership,  regulation,  and  control  of 


BUSINESS  STATESMANSHIP      175 

business  and  industry  by  the  present  state,  on 
the  one  hand,  and  the  creation  of  a  socialistic 
state  on  the  other  both  lead  to  the  same  funda- 
mentally bad  end — the  management  of  the 
larger  aspects  at  least  of  our  productive  and  dis- 
tributive processes  by  a  bureaucratic  class  ra- 
ther than  by  the  men  who  know  and  do,  the  men 
who  handle  the  stuff  of  business  and  industry 
as  their  regular  job.  All  these  considerations 
are  based  upon  the  inadequacy  of  current  pol- 
itics to  meet  the  responsibilities  of  a  highly  in- 
dustrialized society. 

There  is  another  set  of  considerations,  as  I 
have  already  suggested,  growing  out  of  the 
clear  necessities  forced  upon  business  and  in- 
dustry by  the  present  aspirations  and  demands 
of  labor.  These  I  have  taken  up  so  fully  in  the 
two  papers  preceding  this,  that  I  need  do  little 
more  at  this  point  than  to  refer  to  them.  This 
set  of  considerations  has  to  do  with  what  is  be- 
coming a  very  definite  movement  toward  an  or- 
ganization of  business  and  industry  upon  the 
basis  of  self-government  that  shall  be  a  govern- 
ment truly  representative  of  the  employer,  the 
workman,  and  the  community.  And  quite  nat- 
urally business  and  industry  that  is  engaged 
in  the  fundamental  task  of  reordering  itself 


176     THE  POLITICS  OF  INDUSTRY 

upon  a  basis  truly  representative  of  all  classes 
and  interests  concerned  will  not  want  to  be 
hampered  in  this  constructive  task  by  politi- 
cians who  lack  that  sureness  of  touch  and  judg- 
ment that  comes  alone  from  practical  contact 
with  business  and  industry.  Let  us  see  how 
these  considerations  have  arisen. 

Prophecy  is  a  game  as  elusive  as  it  is  tempt- 
ing in  such  times  of  grand-scale  readjustment 
and  revolution  as  we  are  now  passing  through, 
such  as  we  shall  be  passing  through  for  a  long 
stretch  of  months  and  years.  Much  of  current 
forecasting  will  go  to  the  scrap  heap  of  snap 
judgments.  There  are  too  many  unknown  fac- 
tors, too  many  new  factors  being  interjected 
day  by  day,  to  make  prophecy  a  wholly  sci- 
entific calculation.  But  some  things  have 
reached  the  stage  of  essential  certainty ;  among 
them  this :  labor  will  demand,  and  successfully 
demand,  an  increasing  share  in  both  the  profits 
and  management  of  business  and  industry. 
What  changes  in  the  fundamental  organization 
of  business  and  industry  will  that  demand  make 
necessary?  Will  the  increased  participation 
of  labor  in  the  control  of  business  and  indus- 
try make  for  greater  or  less  efficiency?  Will 
it  raise  or  reduce  the  total  profits?  Will  the 


BUSINESS  STATESMANSHIP      177 

wise  employer  oppose  the  demand,  or  will  he 
join  with  his  employees  in  working  out  a  new 
organization  of  the  productive  and  distributive 
machinery  of  the  nation  along  lines  that  will 
mean  an  increase  in  both  the  equity  and  effi- 
ciency of  business?  Does  this  mean  a  class 
war,  or  is  there  a  feasible  cooperation  of  the 
classes?  These  are  the  questions,  cutting  to 
the  heart  of  modern  society  as  they  do,  that 
employers  the  world  over  are  asking  them- 
selves. The  clearer  the  answers  lie  in  the 
minds  of  both  employers  and  employees,  the 
sooner  will  the  job  of  readjustment  find  an  ef- 
fective basis  of  procedure.  And  every  day  an 
increasing  number  of  employers  are  reaching 
an  understanding  of  the  inevitable  answer  to 
these  questions. 

Among  forward-looking  business  men,  the 
conception  is  obtaining  that  the  problem  of  la- 
bor and  capital  is  not  a  question  of  a  test  of 
strength  between  two  opposing  forces;  that 
both  are  "workers'*  engaged  in  a  fundamental 
public  service;  that  the  problem  of  industrial 
relations  will  never  be  solved  by  benevolence 
on  the  part  of  employers  or  by  usurpation  on 
the  part  of  employees ;  that  the  problem  will  be 
solved  when  the  best  and  most  scientific  way  of 


178     THE  POLITICS  OF  INDUSTRY 

doing  business  and  conducting  industry  is 
found ;  and  that  the  best  way  of  doing  business 
will  be  found  to  be  the  most  just  and  harmo- 
nious way  of  doing  business.  It  is  -becoming 
clear  to  the  leaders  of  'business  and  industry 
that  side  by  side  with  this  war,  waged  in  de- 
fense of  political  democracy,  there  has  been  go- 
ing on  a  slightly  less  dramatic  but  equally  fun- 
damental marshalling  of  forces  for  the  exten- 
sion and  protection  of  economic  democracy, 
without  which  political  democracy  is  a  doubt- 
ful guaranty  of  justice  or  permanent  progress. 
Men  are  seeing  that  there  is  no  permanently 
valid  reason  why  the  economic  problem,  which 
so  completely  underlies  our  other  problems, 
must  pass  into  the  hands  of  any  one  class  for 
solution,  whether  that  class  be  employers  or 
employees,  provided  genuine  economic  democ- 
racy is  achieved. 

And  the  idea  of  industrial  and  business  de- 
mocracy is  no  longer  the  scare-phrase  it  once 
was  to  the  responsible  business  and  industrial 
leaders.  Only  the  other  day  one  of  the  big 
business  men  of  this  country,  the  head  of  the 
largest  business  of  its  kind  in  the  world,  said 
to  me,  "Speaking  purely  from  the  business 
point  of  view,  I  am  convinced  that  a  real  demo- 


BUSINESS  STATESMANSHIP      179 

cratization  of  business  that  shall  organize  la- 
bor and  capital  into  a  real  partnership  in  both 
profits  and  management  will  prove  as  great  an 
advance  in  business  efficiency  and  profit  as  in 
social  and  economic  justice.  In  other  words, 
I  am  convinced  that  genuine  democracy  in  busi- 
ness not  only  is  right,  but  that  it  pays.  Fig- 
ured in  terms  of  profit  and  loss,  I  believe  that 
every  argument  against  autocracy  and  class 
control  in  government  is  now  coming  to  apply 
with  equal  force  to  autocracy  and  class  control 
in  business  and  industry."  I  interrupted  him 
to  tell  him  of  a  less  liberal,  and  clearly  less  in- 
telligent, business  man  who  a  few  days  before 
had  scoffed  at  the  idea  of  democratizing  busi- 
ness and  said  that  modern  business  could  not 
be  run  by  New  England  town-meeting  meth- 
ods. He  went  on  to  say, ' '  Of  course  there  never 
was  a  time  when  one  man  or  a  few  men  with 
expert  equipment  and  specialized  experience 
could  not  do  certain  things  better  than  a  mass 
meeting  could  do  them ;  but  looked  at  from  the 
long  view,  democracy  with  all  of  its  mistakes 
arrives  at  right  ends  more  times  than  does  au- 
tocracy. Autocracy  can,  by  its  possible  quick- 
ness of  action,  undoubtedly  achieve  greater  re- 
sults in  a  particular  instance  and  in  a  shorter 


180     THE  POLITICS  OF  INDUSTRY 

time  than  democracy  can.  But  the  unbusiness- 
like thing  about  autocracy  is  that  too  frequently 
it  will  achieve  immense  immediate  improve- 
ment at  the  price  of  stifling  progress  thereaf- 
ter. The  businesslike  thing  about  democracy 
is  that  its  progress,  although  in  some  instances 
less  rapid,  is  more  sustained." 

To  the  degree  that  American  business  men 
act  upon  such  principles  will  the  dangers  of 
Bolshevism  in  this  country  diminish.  Taking 
all  these  contentions  into  consideration  it  is 
clear  that  there  are  more  factors  involved  in  the 
reaction  against  an  increasing  governmental 
ownership,  regulation,  and  control  of  business 
and  industry  than  the  mere  selfish  desire  of  a 
visionless  group  of  business  men  who  want  to 
go  their  socially  irresponsible  way.  And  it  is 
clear  that  the  reaction  against  too  great  cen- 
tralization of  business  and  industrial  functions 
in  the  hands  of  the  government  is  simply  one 
expression  of  a  fundamental  protest  against 
the  unreality  of  present  day  politics,  the  nega- 
tively critical  side  of  a  plea  for  greater  realism 
in  politics.  Granted  the  truth  of  this  conclu- 
sion, what  are  the  probable  lines  of  develop- 
ment in  politics  on  the  one  hand  and  industry 


BUSINESS  STATESMANSHIP      181 

on  the  other  that  will  come  from  this  protest  and 
plea? 

I  do  not  look  for  any  fundamental  constitu- 
tional changes  in  this  country  looking  toward 
a  reform  of  the  basis  of  representation.  I 
think  it  is  very  unlikely  that  we  shall  get  any- 
thing in  the  nature  of  occupational  represen- 
tation supplementary  to  our  representation  by 
geographical  areas.  We  have  a  marked  reluc- 
tance to  experiment  with  our  political  struc- 
ture. What  seems  more  likely  is  a  large-scale 
experiment  in  the  organization  of  business  and 
industry  upon  a  more  representative  and  dem- 
ocratic basis.  We  are  already  seeing  indica- 
tions of  this  in  the  proposal  of  The  Interna- 
tional Harvester  Company  to  institute  shop 
committees  throughout  that  industry.  As  our 
unrest  becomes  more  acute,  we  shall  doubtless 
see  wider  and  wider  application  of  the  Whitley 
scheme  of  joint  industrial  councils  in  our  in- 
dustries. That,  of  course,  is  not  the  last  word 
in  industrial  democracy,  but  it  is  a  start.  And 
the  further  development  of  all  such  ventures 
looking  toward  a  more  democratic  organization 
of  the  relations  of  industry  will  not  only  serve 
as  a  preventive  against  Bolshevistic  tendencies, 


182     THE  POLITICS  OF  INDUSTRY 

but  will  make  material  headway  toward  an  an- 
swer of  the  plea  for  a  more  realistic  politics. 

Such  developments  will  contribute  toward 
the  vitalizing  of  our  political  processes  in  this 
way :  as  the  various  fields  of  interest  in  our  na- 
tional life,  business  and  industry  particularly, 
are  shifted  to  a  broader  base  of  control  and  or- 
ganized along  the  lines  of  truly  representative 
government  that  takes  adequate  account  of  the 
legitimate  interests  of  employer,  employee,  and 
the  consuming  public,  the  necessity,  both  ap- 
parent and  real,  for  political  interference  with 
business  and  industrial  processes  will  grow  less 
and  less.  In  the  end  such  development  of  the 
forms  and  functions  of  self-government  in  busi- 
ness, industry,  and  the  other  functional  fields 
will  mean  that  we  shall  have  a  series  of  coop- 
erating sovereignties  in  these  fields,  with  the 
political  government  acting  as  their  correlator. 
We  shall  arrive  at  a  situation  such  as  I  sug- 
gested in  the  opening  paragraphs  of  this  paper. 
We  shall  see  business  statesmanship  standing 
at  the  center  of  and  administering  business,  in- 
dustrial statesmanship  at  the  center  of  indus- 
try, educational  statesmanship  at  the  center  of 
education,  with  political  statesmanship  acting 
as  the  impresario  of  these  several  statesman- 


BUSINESS  STATESMANSHIP      183 

ships  in  their  relations.  All  this  will  mean  an 
approach  toward  the  ideal  of  government  by 
those  who  know  and  do,  by  those  who  know 
most  about  the  department  of  national  life  that 
they  are  administering.  It  will  tend  in  many 
ways,  if  not  in  the  direct  way  that  would  best 
please  the  theorists,  to  make  the  invisible  gov- 
ernment visible  and  socially  responsible.  The 
political  and  industrial  developments  of  the 
next  ten  years  in  this  country  probably  will  not 
move  along  as  clearly  drawn  lines  as  I  have 
just  suggested,  but  I  think  I  have  suggested  the 
general  trend. 

It  would  materially  help  the  situation  if  some- 
one would  make  a  survey  of  all  attempts  that 
have  been  made  in  this  country  toward  a  more 
democratic  organization  of  business  and  in- 
dustry. Such  a  survey  would  help  to  lift  this 
entire  discussion  out  of  the  realm  of  pure  the- 
ory and,  to  some  degree  at  least,  afford  a  basis 
of  proved  experiments  upon  which  our  business 
and  industrial  leaders  might  found  conclusions 
regarding  the  wisest  procedure.  During  the 
past  three  years  it  has  been  my  fortune  to  work 
in  close  relation  with  Mr.  Edward  A.  Filene, 
President  of  William  Filene 's  Sons  Company, 
the  largest  store  of  its  particular  kind  in  the 


184     THE  POLITICS  OF  INDUSTRY 

world.  This  effective  and  profitable  business 
has  been  developed  at  the  same  time  that  an  at- 
tempt has  been  made  to  organize  the  store  upon 
a  basis  of  the  employees '  sharing  alike  in  profits 
and  management.  To  me  the  most  significant 
thing  about  this  store  is  that  its  managers  have 
not  looked  upon  the  more  democratic  organiza- 
tion of  business  as  an  idealistic  but  costly  con- 
cession to  be  granted  after  a  business  has  suc- 
ceeded and  piled  up  a  large  surplus;  rather 
have  they  regarded  democracy  of  organization 
as  one  of  the  corner-stones  of  permanently  suc- 
cessful business.  In  that  fact  lies  the  justifi- 
cation for  the  mention  of  this  store  in  this  con- 
nection. We  shall  never  lack  for  examples  of 
benevolence  and  paternalism  in  business;  but 
the  way  out  does  not  lie  in  that  direction. 
Some  time  ago  I  asked  Mr.  Edward  A.  Filene 
to  outline  for  me  those  features  in  the  organiza- 
tion of  the  Filene  store  that  he  considered  rep- 
resentative of  principles  that  will  be  helpful  in 
the  inevitable  readjustments  of  business  and 
industrial  organization  in  this  after-the-war 
period,  and  to  tell  me  how  they  have  worked. 
I  want  now  to  summarize  the  results  of  that  in- 
terview. 
In  the  early  days  of  that  business,  the  man- 


BUSINESS  STATESMANSHIP      185 

agers  found  that  they  were  spending  much  time 
and  energy  in  the  adjustment  of  differences  be- 
tween employees  and  executives  which  would 
produce  larger  returns  to  the  business  if  spent 
on  the  more  creative  work  of  clarifying  and 
making  more  effective  the  fundamental  policy 
and  administration  of  the  business.  The  man- 
agers felt  that  every  hour  that  they  were  obliged 
to  give  to  the  adjustment  of  differences  or  to  the 
administration  of  discipline  represented  a  di- 
rect loss  to  the  business,  if  those  matters  could 
be  adequately  attended  to  in  any  other  way. 
They  reckoned  that  the  energy  of  the  manage- 
ment could  be  more  profitably  employed  in  the 
creative  rather  than  the  negative  features  of 
administration,  so  they  determined  to  hand 
over,  so  far  as  practically  possible,  the  matters 
of  discipline  and  the  adjustment  of  differences 
to  the  employees  themselves.  A  Board  of  Ar- 
bitration was  created  in  1901,  if  I  rightly  re- 
member the  date.  This  B'oard  is  composed 
entirely  of  employees.  It  consists  of  twelve 
members  elected,  one  from  each  section  of  the 
store,  and  a  chairman  appointed  from  the 
council  of  the  Filene  Cooperative  Association, 
which  I  shall  discuss  later,  by  the  president 
of  that  body.  This  Arbitration  Board  has  jur- 


186     THE  POLITICS  OF  INDUSTRY 

isdiction  over  all  cases  of  difference  between 
employees  and  the  management;  cases  relating 
to  the  justice  of  rules  affecting  employees,  such 
cases  as  dismissals,  changes  in  position  or 
wage,  transfers,  location  in  the  store,  sales 
shortages,  lost  packages,  breakage,  and  the  like. 
In  all  cases  except  dismissal  or  increase  of  pay, 
where  a  two-thirds  vote  of  the  entire  board  is 
necessary,  the  majority  vote  of  the  entire  board 
decides  the  case.  The  action  of  the  board  is 
final  in  all  cases  arising  within  its  jurisdiction, 
unless  it  sees  fit  to  reconsider  a  case  upon  re- 
quest. To  date  the  board  has  passed  upon 
about  one  thousand  cases,  I  think,  and  about 
one-half  of  these  have  -been  decided  in  favor  of 
the  employees  and  one-half  in  favor  of  the  firm. 
At  the  time  the  board  was  founded,  there  was 
marked  fear  in  many  quarters  that  the  disci- 
pline of  the  store  would  be  undermined.  Many 
business  men  said  that  it  was  impossible  to  sub- 
mit every  question  to  arbitration  by  a  board  of 
employees  and  get  -safe  -and  conservative  judg- 
ments. But  experience  has  proved  this  fear 
to  have  been  unfounded.  The  result  has  been 
highly  satisfactory  as  regards  discipline,  and 
the  time  of  the  management  has  been  freed  for 
the  larger  directive  work  of  the  store.  A  dis- 


BUSINESS  STATESMANSHIP      187 

tinguished  jurist,  who  made  an  analysis  of  the 
records  of  this  arbitration  board,  has  said  that 
the  type  of  justice  meted  out  by  this  board  com- 
pares favorably  with  the  justice  meted  out  in 
any  of  our  courts.  The  board  is  so  organized 
that  its  twelve  members  are  counsellors  to  the 
respective  store  sections  from  which  they  have 
been  elected.  These  counsellors  advise  em- 
ployees in  their  sections  on  questions  arising 
in  the  conduct  of  their  work,  distribute  infor- 
mation regarding  the  Arbitration  Board  and 
its  processes,  and  instruct  employees  in  the  de- 
tails of  presenting  their  cases  before  the  board. 

The  principle  of  the  right  of  the  employees  to 
participation  in  the  conduct  of  the  business  is 
further  recognized  in  the  arrangement  under 
which  today  four  of  the  eleven  members  of  the 
directorate  are  representatives  of  the  employ- 
ees who  exercise  the  right  of  direct  nomination. 
And  the  store  is  experimenting  its  way  toward 
some  workable  method  of  profit-sharing. 

Throughout  the  store  organization  an  at- 
tempt has  been  made  to  work  out  and  apply 
what  I  may  call  the  " confidential'*  principle. 
Let  me  illustrate  what  I  mean.  After  the  es- 
tablishment of  an  employees'  hospital  or  clinic 
in  connection  with  the  store,  the  managers 


188     THE  POLITICS  OF  INDUSTRY 

found  that  many  employees  were  reluctant  to 
take  advantage  of  it  because  of  the  fear  that 
the  bringing  of  their  physical  defects  or  disor- 
ders to  the  attention  of  the  management  might 
result  in  discrimination  or  dismissal.  With 
that  highly  practical  and  scientific  procedure 
which  has  marked  the  development  of  this 
store,  the  managers  gave  to  the  employees  the 
power  to  dismiss  any  nurse  or  doctor  who 
should  violate  their  confidence.  This  arrange- 
ment has  produced  marked  results.  An  aver- 
age of  about  two  hundred  employees  take  ad- 
vantage of  the  clinic  every  day,  either  for  treat- 
ment or  advice.  This  has  materially  reduced 
the  charge  on  the  business  involved  in  absences 
due  to  sickness. 

All  of  these  factors — the  control  of  the  Ar- 
bitration Board  by  the  employees,  the  sharing 
of  profits  by  employees,  the  participation  in  the 
management  by  employees,  and  the  payment  of 
relatively  high  wages — have  proved  a  marked 
business  advantage  instead  of  a  drain  upon  the 
profits  of  the  business.  They  have  made  for 
the  spirit  of  team  work  and  have  meant  the  de- 
velopment of  a  higher  and  higher  type  of  em- 
ployee. 

All  of  these  features  find  expression  in  and 


BUSINESS  STATESMANSHIP      189 

through  the  Filene  Cooperative  Association, 
an  organization  to  which  every  regular  em- 
ployee of  the  store  belongs,  and  enjoys  a  voting 
privilege  in,  by  virtue  of  employment  in  the 
store.  In  this  organization  no  dues  are  im- 
posed, but  each  feature  of  its  work  is  planned 
to  be  self-supporting.  Where  such  is  not  the 
case,  it  simply  means  that  they  have  not  yet 
worked  out  completely  the  technique  of  this  pol- 
icy which  they  steadfastly  hold  as  their  goal. 
Participation  in  this  work  is  'optional.  It  is  the 
central  organ  of  government  in  -this  store  com- 
munity of  .some  three  thousand  business  citizens. 
It  conducts  the  social  and  so-called  " welfare" 
work  of  the  store,  without  the  dictation  but  with 
the  cooperation  of  the  management.  Aside 
from  its  representation  on  the  directorate  of 
the  store,  it  has,  in  certain  matters,  a  direct 
voice  in  the  management.  For  example,  if  two- 
thirds  of  the  members  of  the  Filene  Coopera- 
tive Association  vote  in  mass  meeting  to  ini- 
tiate, change,  or  amend  any  rule  affecting  the 
discipline  or  working  conditions  of  the  store, 
the  vote  becomes  immediately  operative.  Or, 
if  five-sixths  of  the  members  of  the  governing 
body  of  the  Filene  Cooperative  Association 
vote  in  favor  of  any  such  rule,  it  goes  into  effect 


190     THE  POLITICS  OF  INDUSTEY 

at  the  end  of  a  week,  unless  during  the  week  it 
is  vetoed  by  the  general  manager,  president,  or 
board  of  managers  of  the  corporation,  or  a  ma- 
jority vote  of  the  Filene  Cooperative  Associa- 
tion membership.  But  even  when  vetoed  by 
the  management,  a  mass  meeting  of  the  em- 
ployees may  be  held  and  a  two-thirds  vote  of 
the  entire  association  at  such  meeting  passes 
the  rule  over  the  veto. 

I  need  not  here  go  into  the  numerous  mat- 
ters of  insurance,  education,  recreation,  and 
other  features  which  the  Filene  Cooperative 
Association  controls.  Such  features  are  to  be 
found  in  many  businesses  and  industries  irre- 
spective of  the  degree  of  democracy  that  enters 
into  their  fundamental  organization.  The  dis- 
tinctive feature  of  such  matters  in  the  Filene 
store  is  that  they  are  under  the  control  and  di- 
rection of  the  employees,  not  the  employers. 

I  may  have  gone  astray  on  a  minor  detail  or 
two  in  this  analysis  of  the  Filene  organization, 
but  I  think  I  have  given  an  essentially  accurate 
description  of  its  constitution  and  functioning. 
I  have  followed  the  workings  of  this  business 
with  a  growing  enthusiasm  for  its  underlying 
idea,  but  I  have  always  known  that  the  sugges- 
tion of  anything  like  a  general  application*  of 


BUSINESS  STATESMANSHIP      191 

these  principles  to  American  business  and  in- 
dustry would  be  met  in  certain  quarters  by  the 
contention  that  these  principles  have  succeeded 
in  the  case  of  this  particular  business  primarily 
because  of  the  spirit,  attitude  and  technique  of 
the  management,  that  they  would  not  succeed 
in  any  widespread  application  to  our  entire 
business  and  industrial  life.  I  put  this  ques- 
tion to  Mr.  Filene  one  day,  and  he  replied, 
"These  things  work  because  they  are  funda- 
mentally sound,  and  because  they  are  funda- 
mentally sound  they  will  work  in  any  business 
where  they  are  courageously  put  to  the  test. 
These  experiments,  I  know,  may  seem  danger- 
ous to  the  employer  who  has  not  tried  them. 
At  first  we  had  fears  that  the  granting  of  such 
powers  to  employees  might  not  always  work 
toward  the  common  good  of  all  concerned,  but 
our  employees  have  never  misused  their  powers, 
never,  to  my  knowledge,  have  they  acted  upon 
the  basis  of  a  purely  class  interest." 

It  seems  to  me  that  all  this  should  be  highly 
suggestive  to  the  leaders  of  American  business 
and  industry  in  the  face  of  the  fundamental  la- 
bor unrest  that  is  moving  across  the  world. 
These  experiments  would  seem  to  suggest  that 
when  the  powers  granted  to  employees  are  real 


192     THE  POLITICS  OF  INDUSTRY 

powers,  where  the  responsibility  enjoyed  by  la- 
bor is  real  responsibility  in  the  determination 
of  wages,  hours,  conditions  of  work,  and  the 
settlement  of  disputes,  the  net  result  is  not  rad- 
ical, but  sanely  conservative.  This  does  not 
mean  that  such  a  system  is  a  capitalistic  scheme 
to  dull  the  edge  of  labor's  demands  by  granting 
an  authority  which  the  employer  is  fairly  safe 
in  assuming  will  be  little  used.  It  means  sim- 
ply this:  so  long  as  employers  organize  busi- 
ness and  industry  upon  the  theory  that  labor 
is  a  purchasable  commodity  we  may  expect  a 
discontent  upon  the  part  of  employees  express- 
ing itself  largely  in  negative  criticism  and 
protest,  but  where  the  employees  are  made  a 
working  part  of  the  management  with  a  real 
voice,  then  what  would  otherwise  be  trouble- 
some protest  growing  out  of  discontent  becomes 
constructive  effort  to  determine  upon  and  cre- 
ate satisfactory  conditions.  Participation  in 
management,  if  it  be  real,  does  not  diminish  the 
rightful  demands  of  labor,  but  it  does  convert 
a  large  part  of  labor's  legitimate  protest  into 
an  instrument  of  constructive  endeavor. 

I  have  attached  this  analysis  of  a  particular 
business  to  the  arguments  of  the  main  body  of 


BUSINESS  STATESMANSHIP      193 

this  paper  as  an  exhibit  of  a  laboratory  exper- 
iment in  the  principle  of  self-governing  busi- 
ness and  industry  suggested  throughout  this 
discussion. 


APPENDIX 
THE  WHITLEY  REPORT 

To  the  Right  Honourable  D.  LLOYD  GEORGE,  M.P., 

Prime  Minister. 
SIR, 

WE  have  the  honour  to  submit  the  following 
Interim  Report  on  Joint  Standing  Industrial  Councils. 

2.  The  terms  of  reference  to  the  Sub-Committee 
are: — 

"(1)  To  make  and  consider  suggestions  for 
securing  a  permanent  improvement  in  the  relations 
between  employers  and  workmen. 

"(2)  To  recommend  means  for  securing  that 
industrial  conditions  affecting  the  relations  between 
employers  and  workmen  shall  be  systematically 
reviewed  by  those  concerned,  with  a  view  to  im- 
proving conditions  in  the  future." 

3.  After  a  general  consideration  of  our  duties  in 
relation  to  the  matters  referred  to  us,  we  decided  first 
to  address  ourselves  to  the  problem  of  establishing 
permanently  improved  relations  between  employers 
and  employed  in  the  main  industries  of  the  country, 
in  which  there  exist  representative  organisations  on 
both   sides.     The   present  report   accordingly   deals 
more  especially  with  these  trades.    We  are  proceeding 
with  the  consideration  of  the  problems  connected  with 
the  industries  which  are  less  well  organised. 

195 


196     THE  POLITICS  OF  INDUSTRY 

4.  We  appreciate  that  under  the  pressure  of  the 
war  both  employers  and  workpeople  and  their  or- 
ganisations are  very  much  pre-occupied,  but,   not- 
withstanding,  we  believe   it  to   be  of   the  highest 
importance  that  our  proposals  should  be  put  before 
those  concerned  without  delay,  so  that  employers  and 
employed  may  meet  in  the  near  future  and  discuss 
the  problems  before  them. 

5.  The    circumstances    of   the    present    time    are 
admitted  on  all  sides  to  offer  a  great  opportunity  for 
securing  a  permanent  improvement  in  the  relations 
between  employers  and  employed,  while  failure  to 
utilise  the  opportunity  may  involve  the  nation  in 
grave  industrial  difficulties  at  the  end  of  the  war. 

It  is  generally  allowed  that  the  war  almost  enforced 
some  reconstruction  of  industry,  and  in  considering 
the  subjects  referred  to  us  we  have  kept  in  view  the 
need  for  securing  in  the  development  of  reconstruc- 
tion the  largest  possible  measure  of  co-operation  be- 
tween employers  and  employed. 

In  the  interests  of  the  community  it  is  vital  that 
after  the  war  the  co-operation  of  all  classes,  estab- 
lished during  the  war,  should  continue,  and  more 
especially  with  regard  to  the  relations  between  em- 
ployers and  employed.  For  securing  improvement 
in  the  latter,  it  is  essential  that  any  proposals  put 
forward  should  offer  to  workpeople  the  means  of 
attaining  improved  conditions  of  employment  and  a 
higher  standard  of  comfort  generally,  and  involve 
the  enlistment  of  their  active  and  continuous  co- 
operation in  the  promotion  of  industry. 


APPENDIX  197 

To  this  end,  the  establishment  for  each  industry 
of  an  organisation,  representative  of  employers  and 
workpeople,  to  have  as  its  object  the  regular  consid- 
eration of  matters  affecting  the  progress  and  well- 
being  of  the  trade  from  the  point  of  view  of  all  those 
engaged  in  it,  so  far  as  this  is  consistent  with  the 
general  interest  of  the  community,  appears  to  us 
necessary. 

6.  Many  complicated  problems  have  arisen  during 
the  war  which  have  a  bearing  both  on  employers  and 
workpeople,   and  may  affect  the  relations  between 
them.     It  is  clear  that  industrial  conditions  will  need 
careful  handling  if  grave  difficulties  and  strained 
relations  are  to  be  avoided  after  the  war  has  ended. 
The  precise  nature  of  the  problems  to  be  faced  natu- 
rally varies  from  industry  to  industry,  and  even  from 
branch  to  branch  within  the  same  industry.     Their 
treatment  consequently  will  need  an  intimate  knowl- 
edge of  the  facts  and  circumstances  of  each  trade, 
and  such  knowledge  is  to  be  found  only  among  those 
directly  connected  with  the  trade. 

7.  "With  a  view  to  providing  means  for  carrying  out 
the  policy  outlined  above,  we  recommend  that  His 
Majesty's  Government  should  propose  without  delay  to 
the  various  associations  of  employers  and  employed 
the  formation  of  Joint  Standing  Industrial  Councils 
in  the  several  industries,  where  they  do  not  already 
exist,  composed  of  representatives  of  employers  and 
employed,  regard  being  paid  to  the  various  sections  of 
the  industry  and  the  various  classes  of  labour  engaged. 

8.  The  appointment  of  a  Chairman  or  Chairmen 


198      THE  POLITICS  OF  INDUSTRY 

should,  we  think,  be  left  to  the  Council  who  may 
decide  that  these  should  be — 

(1)  A  Chairman  for  each  side  of  the  Council; 

(2)  A    Chairman   and   Vice-Chairman   selected 
from  the  members  of  the  Council  (one  from  each 
side  of  the  Council) ; 

(3)  A   Chairman  chosen  by  the  Council  from 
independent  persons  outside  the  industry;  or 

(4)  A  Chairman  nominated  by  such  person  or 
authority  as  the  Council  may  determine  or,  failing 
agreement,  by  the  Government. 

9.  The  Council  should  meet  at  regular  and  frequent 
intervals. 

10.  The  objects  to  which  the  consideration  of  the 
Councils  should  be  directed  should  be  appropriate 
matters  affecting  the  several  industries  and  particu- 
larly the  establishment  of  a  closer  co-operation  be- 
tween employers  and  employed.     Questions  connected 
with  demobilisation  will  call  for  early  attention. 

11.  One  of  the  chief  factors  in  the  problem,  as  it  at 
first  presents  itself,  consists  of  the  guarantees  given 
by  the  Government,  with  Parliamentary  sanction,  and 
the  various  undertakings  entered  into  by  employers, 
to    restore    the    Trade    Union    rules    and    customs 
suspended  during  the  war.    While  this  does  not  mean 
that  all  the  lessons  learnt  during  the  war  should  be 
ignored,  it  does  mean  that  the  definite  co-operation 
and  acquiescence  by  both  employers  and  employed 
must  be  a  condition  of  any  setting  aside  of  these 
guarantees  or  undertakings,  and  that,  if  new  arrange- 
ments are  to  be  reached,  in  themselves  more  satis- 


APPENDIX  199 

factory  to  all  parties  but  not  in  strict  accordance 
with  the  guarantees,  they  must  be  the  joint  work  of 
employers  and  employed. 

12.  The  matters  to  be  considered  by  the  Councils 
must  inevitably  differ  widely  from  industry  to  in- 
dustry, as  different  circumstances  and  conditions  call 
for  different  treatment,  but  we  are  of  opinion  that 
the  suggestions  set  forth  below  ought  to  be  taken  into 
account,  subject  to  such  modification  in  each  case  as 
may  serve  to  adapt  them  to  the  needs  of  the  various 
industries. 

13.  In  the  well-organised  industries,   one  of  the 
first  questions  to  be  considered  should  be  the  estab- 
lishment of  local  and  works  organisations  to  supple- 
ment and  make  more  effective  the  work  of  the  central 
bodies.    It  is  not  enough  to  secure  co-operation  at 
the  centre  between  the  national  organisations;  it  is 
equally  necessary  to  enlist  the  activity  and  support 
of  employers  and  employed  in  the  districts  and  in 
individual  establishments.    The  National  Industrial 
Council  should  not  be  regarded  as  complete  in  itself; 
what  is  needed  is  a  triple  organisation — in  the  work- 
shops, the  districts,  and  nationally.    Moreover,  it  is 
essential  that  the  organisation  at  each  of  these  three 
stages  should  proceed  on  a  common  principle,  and 
that  the  greatest  measure  of  common  action  between 
them  should  be  secured. 

14.  With  this  end  in  view,  we  are  of  opinion  that 
the  following  proposals  should  be  laid  before  the 
National  Industrial  Councils: — 

(a)  That  District  Councils,  representative  of  the 


200      THE  POLITICS  OF  INDUSTRY 

Trade  Unions  and  of  the  Employers'  Association 
in  the  industry,  should  be  created,  or  developed 
out  of  the  existing  machinery  for  negotiation  in  the 
various  trades. 

(Z>)  That  Works  Committees,  representative  of 
the  management  and  of  the  workers  employed, 
should  be  instituted  in  particular  works  to  act 
in  close  co-operation  with  the  district  and  national 
machinery. 

As  it  is  of  the  highest  importance  that  the  scheme 
making  provision  for  these  Committees  should  be  such 
as  to  secure  the  support  of  the  Trade  Unions  and 
Employers'  Associations  concerned,  its  design  should 
be  a  matter  for  agreement  between  these  organisations. 
Just  as  regular  meetings  and  continuity  of  co-opera- 
tion are  essential  in  the  case  of  the  National  Indus- 
trial Councils,  so  they  seem  to  be  necessary  in  the 
case  of  the  district  and  works  organisations.  The 
object  is  to  secure  co-operation  by  granting  to  work- 
people a  greater  share  in  the  consideration  of  matters 
affecting  their  industry,  and  this  can  only  be  achieved 
by  keeping  employers  and  workpeople  in  constant 
touch. 

15.  The  respective  functions  of  Works  Committees, 
District  Councils,  and  National  Councils  will  no  doubt 
require  to  be  determined  separately  in  accordance 
with  the  varying  conditions  of  different  industries. 
Care  will  need  to  be  taken  in  each  case  to  delimit 
accurately  their  respective  functions,  in  order  to 
avoid  overlapping  and  resulting  friction.  For  in- 
stance, where  conditions  of  employment  are  deter- 


APPENDIX  201 

mined  by  national  agreements,  the  District  Councils 
or  Works  Committees  should  not  be  allowed  to  con- 
tract out  of  conditions  so  laid  down,  nor,  where  con- 
ditions are  determined  by  local  agreements,  should 
such  power  be  allowed  to  Works  Committees. 

16.  Among  the  questions  with  which  it  is  suggested 
that  the  National  Councils  should  deal  or  allocate  to 
District  Councils  or  Works  Committees  the  following 
may  be  selected  for  special  mention : — 

(i)  The  better  utilisation  of  the  practical  knowl- 
edge and  experience  of  the  workpeople. 

(ii)  Means  for  securing  to  the  workpeople  a 
greater  share  in  and  responsibility  for  the  deter- 
mination and  observance  of  the  conditions  under 
which  their  work  is  carried  on. 

(iii)  The  settlement  of  the  general  principles 
governing  the  conditions  of  employment,  including 
the  methods  of  fixing,  paying,  and  readjusting 
wages,  having  regard  to  the  need  for  securing  to 
the  workpeople  a  share  in  the  increased  prosperity 
of  the  industry. 

(iv)  The  establishment  of  regular  methods  of 
negotiation  for  issues  arising  between  employers 
and  workpeople,  with  a  view  both  to  the  prevention 
of  dfferences,  and  to  their  better  adjustment  when 
they  appear. 

(v)  Means  of  ensuring  to  the  workpeople  the 
greatest  possible  security  of  earnings  and  employ- 
ment, without  undue  restriction  upon  change  of 
occupation  or  employer. 

(vi)  Methods  of  fixing  and  adjusting  earnings, 


202      THE  POLITICS  OP  INDUSTRY 

piecework  prices,  &c.,  and  of  dealing  with  the 
many  difficulties  which  arise  with  regard  to  the 
method  and  amount  of  payment  apart  from  the 
fixing  of  general  standard  rates,  which  are  already 
covered  by  paragraph  (iii). 

(vii)  Technical  education  and  training, 
(viii)  Industrial  research  and  the  full  utilisation 
of  its  results. 

(ix)  The  provision  of  facilities  for  the  full  con- 
sideration and  utilisation  of  inventions  and  im- 
provement designed  by  workpeople,  and  for  the 
adequate  safeguarding  of  the  rights  of  the  designers 
of  such  improvements. 

(x)  Improvements  of  processes,  machinery  and 
organisation  and  appropriate  questions  relating  to 
management  and  the  examination  of  industrial 
experiments,  with  special  reference  to  co-operation 
in  carrying  new  ideas  into  effect  and  full  con- 
sideration of  the  workpeople's  point  of  view  in 
relation  to  them. 

(xi)  Proposed  legislation  affecting  the  industry. 
17.  The  methods  by  which  the  functions  of  the  pro- 
posed Councils  should  be  correlated  to  those  of  joint 
bodies  in  the  different  districts,  and  in  the  various 
works  within  the  districts,  must  necessarily  vary 
according  to  the  trade.  It  may,  therefore,  be  the 
best  policy  to  leave  it  to  the  trades  themselves  to 
formulate  schemes  suitable  to  their  special  circum- 
stances, it  being  understood  that  it  is  essential  to 
secure  in  each  industry  the  fullest  measure  of  co- 
operation between  employers  and  employed,  both 


APPENDIX  203 

generally,  through  the  National  Councils,  and  specif- 
ically, through  district  Committees  and  workshop 
Committees. 

18.  It  would  seem  advisable  that  the  Government 
should  put  the  proposals  relating  to  National  Indus- 
trial Councils  before  the  employers'  and  workpeople's 
associations  and  request  them  to  adopt  such  measures 
as  are  needful  for  their  establishment  where  they  do 
not  already  exist.    Suitable  steps  should  also  be  taken, 
at  the  proper  time,  to  put  the  matter  before  the  gen- 
eral public. 

19.  In  forwarding  the  proposals  to  the  parties  con- 
cerned, we  think  the  Government  should  offer  to  be 
represented  in  an  advisory  capacity  at  the  preliminary 
meetings  of  a  Council,  if  the  parties  so  desire.    We 
are   also   of   opinion   that   the    Government   should 
undertake  to  supply  to  the  various  Councils  such 
information  on  industrial  subjects  as  may  be  available 
and  likely  to  prove  of  value. 

20.  It  has  been  suggested  that  means  must  be  de- 
vised to  safeguard  the  interests  of  the  community 
against  possible  action  of  an  anti-social  character  on 
the  part  of  the  Councils.    We  have,  however,  here 
assumed  that  the  Councils,  in  their  work  of  promoting 
the  interests  of  their  own  industries,  will  have  regard 
for  the  National  interest.    If  they  fulfil  their  func- 
tions they  will  be  the  best  builders  of  national  pros- 
perity.    The    State   never   parts   with   its   inherent 
over-riding  power,  but  such  power  may  be  least  needed 
when  least  obtruded. 


204     THE  POLITICS  OF  INDUSTRY 

21.  It  appears  to  us  that  it  may  be  desirable  at 
some  later  stage  for  the  State  to  give  the  sanction 
of  law  to  agreements  made  by  the  Councils,  but  the 
initiative   in  this  direction   should   come   from  the 
Councils  themselves. 

22.  The  plans  sketched  in  the  foregoing  paragraphs 
are  applicable  in  the  form  in  which  they  are  given 
only  to  industries  in  which  there   are  responsible 
associations  of  employers  and  workpeople  which  can 
claim  to  be  fairly  representative.    The  case  of  the  less 
well-organised  trades  or  sections  of  a  trade  necessarily 
needs  further  consideration.    We  hope  to  be  in  a  posi- 
tion shortly  to  put  forward  recommendations  that 
will  prepare  the  way  for  the  active  utilisation  in 
these  trades  of  the  same  practical  co-operation  as  is 
foreshadowed  in  the  proposals  made  above  for  the 
more  highly-organised  trades. 

23.  It  may  be  desirable  to  state  here  our  considered 
opinion  that  an  essential  condition  of  securing  a  per- 
manent improvement  in  the  relations  between  em- 
ployers and  employed  is  that  there  should  be  adequate 
organisation  on  the  part  of  both  employers  and  work- 
people.    The  proposals  outlined  for  joint  co-operation 
throughout  the  several  industries  depend  for  their 
ultimate  success  upon  there  being  such  organisation 
on  both  sides;   and  such  organisation  is  necessary 
also  to  provide  means  whereby  the  arrangements  and 
agreements  made  for  the  industry  may  be  effectively 
carried  out. 

24.  We  have  thought  it  well  to  refrain  from  making 


APPENDIX  205 

suggestions  or  offering  opinions  with  regard  to  such 
matters  as  profit-sharing,  co-partnership,  or  particu- 
lar systems  of  wages,  &c.  It  would  be  impracticable 
for  us  to  make  any  useful  general  recommendations 
on  such  matters,  having  regard  to  the  varying  condi- 
tions in  different  trades.  We  are  convinced,  more- 
over, that  a  permanent  improvement  in  the  relations 
between  employers  and  employed  must  be  founded 
upon  something  other  than  a  cash  basis.  What  is 
wanted  is  that  the  workpeople  should  have  a  greater 
opportunity  of  participating  in  the  discussion  about 
and  adjustment  of  those  parts  of  industry  by  which 
they  are  most  affected. 

25.  The  schemes  recommended  in  this  Report  are 
intended  not  merely  for  the  treatment  of  industrial 
problems  when  they  have  become  acute,  but  also,  and 
more   especially,   to   prevent  their  becoming  acute. 
We  believe  that  regular  meetings  to  discuss  industrial 
questions,  apart  from  and  prior  to  any  differences 
with  regard  to  them  that  may  have  begun  to  cause 
friction,  will  materially  reduce  the  number  of  occa- 
sions on  which,  in  the  view  of  either  employers  or 
employed,  it  is  necessary  to  contemplate  recourse  to 
a  stoppage  of  work. 

26.  We  venture  to  hope  that  representative  men  in 
each  industry,  with  pride  in  their  calling  and  care 
for  its  place  as  a  contributor  to  the  national  well- 
being,  will  come  together  in  the  manner  here  sug- 
gested, and  apply  themselves  to  promoting  industrial 
harmony  and  efficiency  and  removing  the  obstacles 
that  have  hitherto  stood  in  the  way. 


206      THE  POLITICS  OF  INDUSTRY 

"We  have  the  honour  to  be,  Sir, 

Your  obedient  Servants, 

3T.  H.  WHITLEY,  Chairman 

F.  S.  BUTTON 
GEO.  J.  CARTER 
S.  J.  CHAPMAN 

G.  H.  CLAUGHTON 
J.  R.  CLTNES 

J.  A.  HOBSON 

A.  SUSAN  LAWRENCE 

J.  J.  MALLON 

THOS.  R.  RATCLIPPE-ELLIS 

ROBT.  SMILLIE 

ALLAN  M.  SMITH 

MONA  WILSON 

H.  J.  WILSON 
ARTHUR  GREENWOOD 
Secretaries 
8th  March,  1917. 


APPENDIX  207 

LETTER  ADDRESSED  BY  THE  MINISTER  OF 
LABOUR  TO  THE  LEADING  EMPLOYERS' 
ASSOCIATIONS  AND  TRADE  UNIONS. 

MINISTRY  OP  LABOUR, 
MONTAGU  HOUSE, 

WHITEHALL,  S.W.  1. 

20th  October,  1917. 
SIR, 

IN  July  last  a  circular  letter  was  addressed  by 
the  Ministry  of  Labour  to  all  the  principal  Employers' 
Associations  and  Trade  Unions  asking  for  their  views 
on  the  proposals  made  in  the  Report  of  the  Whitley 
Committee  on  Joint  Standing  Industrial  Councils,  a 
further  copy  of  which  is  enclosed.  As  a  result  of  the 
replies  which  have  been  received  from  a  large  number 
of  Employers'  organisations  and  Trade  Unions  gen- 
erally favouring  the  adoption  of  those  proposals,  the 
War  Cabinet  have  decided  to  adopt  the  Report  as  part 
of  the  policy  which  they  hope  to  see  carried  into  effect 
in  the  field  of  industrial  reconstruction. 

In  order  that  the  precise  effect  of  this  decision  may 
not  be  misunderstood,  I  desire  to  draw  attention  to 
one  or  two  points  which  have  been  raised  in  the  com- 
munications made  to  the  Ministry  on  the  subject,  and 
on  which  some  misapprehension  appears  to  exist  in 
some  quarters. 

In  the  first  place,  fears  have  been  expressed  that  the 
proposal  to  set  up  Industrial  Councils  indicates  an 
intention  to  introduce  an  element  of  State  interference 
which  has  hitherto  not  existed  in  Industry.  This  is 


208     THE  POLITICS  OF  INDUSTRY 

not  the  case.  The  formation  and  constitution  of  the 
Councils  must  be  principally  the  work  of  the  indus- 
tries themselves.  Although,  for  reasons  which  will  be 
explained  later,  the  Government  are  very  anxious  that 
such  Councils  should  be  established  in  all  the  well- 
organised  industries  with  as  little  delay  as  possible, 
they  fully  realise  that  the  success  of  the  scheme  must 
depend  upon  a  general  agreement  among  the  various 
organisations  within  a  given  industry  and  a  clearly 
icxpressed  demand  for  the  creation  of  a  Council. 
Moreover,  when  formed,  the  Councils  would  be  inde- 
pendent bodies  electing  their  own  officers  and  free 
to  determine  their  own  functions  and  procedure  with 
reference  to  the  peculiar  needs  of  each  trade.  In  fact, 
they  would  be  autonomous  bodies,  and  they  would,  in 
effect,  make  possible  a  larger  degree  of  self-govern- 
ment in  industry  than  exists  to-day. 

Secondly,  the  Report  has  been  interpreted  as  mean- 
ing that  the  general  constitution  which  it  suggests 
should  be  applied  without  modification  to  each  in- 
dustry. This  is  entirely  contrary  to  the  view  of  the 
Government  on  the  matter.  To  anyone  with  a  knowl- 
edge of  the  diverse  kinds  of  machinery  already  in 
operation,  and  the  varying  geographical  and  indus- 
trial conditions  which  affect  different  industries  it  will 
be  obvious  that  no  rigid  scheme  can  be  applied  to 
all  of  them.  Each  industry  must  therefore  adapt 
the  proposals  made  in  the  Report  as  may  seem  most 
suitable  to  its  own  needs.  In  some  industries,  for 
instance,  it  may  be  considered  by  both  employers  and 
employed  that  a  system  of  Works  Committees  is  un- 


APPENDIX  209 

necessary  owing  to  the  perfection  of  the  arrangements 
already  in  operation  for  dealing  with  the  difficulties 
arising  in  particular  works  between  the  management 
and  the  trade  union  officials.  In  others  Works  Com- 
mittees have  done  very  valuable  work  where  they 
have  been  introduced  and  their  extension  on  agreed 
lines  deserves  every  encouragement.  Again,  in  in- 
dustries which  are  largely  based  on  district  organisa- 
tions it  will  probably  be  found  desirable  to  assign 
more  important  functions  to  the  District  Councils 
than  would  be  the  case  in  trades  which  are  more 
completely  centralised  in  national  bodies.  All  these 
questions  will  have  to  be  threshed  out  by  the  industries 
themselves  and  settled  in  harmony  with  their  particu- 
lar needs. 

Thirdly,  it  should  be  made  clear  that  representation 
on  the  Industrial  Councils  is  intended  to  be  on  the 
basis  of  existing  organisations  among  employers  and 
workmen  concerned  in  each  industry,  although  it  will, 
of  course,  be  open  to  the  Councils,  when  formed,  to 
grant  representation  to  any  new  bodies  which  may 
come  into  existence  and  which  may  be  entitled  to 
representation.  The  authority,  and  consequently  the 
usefulness  of  the  Councils  will  depend  entirely  on 
the  extent  to  which  they  represent  the  different  in- 
terests and  enjoy  the  whole-hearted  support  of  the 
existing  organisations,  and  it  is  therefore  desirable 
that  representation  should  be  determined  on  as  broad 
a  basis  as  possible. 

Lastly,  it  has  been  suggested  that  the  scheme  is 
intended  to  promote  compulsory  arbitration.  This  is 


210     THE  POLITICS  OF  INDUSTRY 

certainly  not  the  case.  Whatever  agreements  may  be 
made  for  dealing  with  disputes  must  be  left  to  the 
industry  itself  to  frame,  and  their  efficacy  must  de- 
pend upon  the  voluntary  co-operation  of  the  organisa- 
tions concerned  in  carrying  them  out. 

I  should  now  like  to  explain  some  of  the  reasons 
which  have  made  the  Government  anxious  to  see  In- 
dustrial Councils  established  as  soon  as  possible  in 
the  organised  trades.  The  experience  of  the  war  has 
shown  the  need  for  frequent  consultation  between  the 
Government  and  the  chosen  representatives  of  both 
employers  -and  workmen  on  vital  questions  concerning 
those  industries  which  have  been  most  affected  by  war 
conditions.  In  some  instances  different  Government 
Departments  have  approached  different  organisations 
in  the  same  industry,  and  in  many  cases  the  absence 
of  joint  representative  bodies  which  can  speak  for 
their  industries  as  a  whole  and  voice  the  joint  opinion 
of  employers  and  workmen,  has  been  found  to  render 
negotiations  much  more  difficult  than  they  would 
otherwise  have  been.  The  case  of  the  cotton  trade, 
where  the  industry  is  being  regulated  during  a  very 
difficult  time  by  a  Joint  Board  of  Control,  indicates 
how  greatly  the  task  of  the  State  can  be  alleviated  by 
a  self-governing  body  capable  of  taking  charge  of  the 
interests  of  the  whole  industry.  The  problems  of  the 
period  of  transition  and  reconstruction  will  not  be  less 
difficult  than  those  which  the  war  has  created,  and  the 
Government  accordingly  feel  that  the  task  of  re- 
building the  social  and  economic  fabric  on  a  broader 
and  surer  foundation  will  be  rendered  much  easier  if 


APPENDIX  211 

in  the  organised  trades  there  exist  representative 
bodies  to  which  the  various  questions  of  difficulty  can 
be  referred  for  consideration  and  advice  as  they  arise. 
There  are  a  number  of  such  questions  on  which  the 
Government  will  need  the  united  and  considered 
opinion  of  each  large  industry,  such  as  the  demobilisa- 
tion of  the  Forces,  the  re-settlement  of  munition 
workers  in  civil  industries,  apprenticeship  (especially 
where  interrupted  by  war  service),  the  training  and 
employment  of  disabled  soldiers,  and  the  control  of 
raw  materials ;  and  the  more  it  is  able  to  avail  itself 
of  such  an  opinion  the  more  satisfactory  and  stable- 
the  solution  of  these  questions  is  likely  to  be. 

Furthermore,  it  will  be  necessary  in  the  national 
interest  to  ensure  a  settlement  of  the  more  permanent 
questions  which  have  caused  differences  between 
employers  and  employed  in  the  past,  on  such  a  basis 
as  to  prevent  the  occurrence  of  disputes  and  of  serious 
stoppages  in  the  difficult  period  during  which  the 
problems  just  referred  to  will  have  to  be  solved.  It 
is  felt  that  this  object  can  only  be  secured  by  the 
existence  of  permanent  bodies  on  the  lines  suggested 
by  the  Whitley  Report,  which  will  be  capable  not 
merely  of  dealing  with  disputes  when  they  arise,  but 
of  settling  the  big  questions  at  issue  so  far  as  possible 
on  such  a  basis  as  to  prevent  serious  conflicts  arising 
at  all. 

The  above  statement  of  the  functions  of  the  Coun- 
cils is  not  intended  to  be  exhaustive,  but  only  to 
indicate  some  -of  the  more  immediate  questions  which 
they  will  be  called  upon  to  deal  with  when  set  up. 


212     THE  POLITICS  OF  INDUSTRY 

Their  general  objects  are  described  in  the  words  of 
the  Report  as  being  "to  offer  to  workpeople  the  means 
of  attaining  improved  conditions  of  employment  and 
a  higher  standard  of  comfort  generally,  and  involve 
the  enlistment  of  their  active  and  continuous  co- 
operation in  the  promotion  of  industry."  Some  fur- 
ther specific  questions,  which  the  Councils  might  con- 
sider, were  indicated  by  the  Committee  in  paragraph 
16  of  the  Report,  and  it  will  be  for  the  Councils 
themselves  to  determine  what  matters  they  shall  deal 
with.  Further,  such  Councils  would  obviously  be  the 
suitable  bodies  to  make  representations  to  the  Govern- 
ment as  to  legislation,  which  they  think  would  be  of 
advantage  to  their  industry. 

In  order,  therefore,  that  the  Councils  may  be  able 
to  fulfil  the  duties  which  they  will  be  asked  to  under- 
take, and  that  they  may  have  the  requisite  status  for 
doing  so,  the  Government  desire  it  to  be  understood 
that  the  Councils  will  be  recognised  as  the  official 
standing  Consultative  Committees  to  the  Government 
on  all  future  questions  affecting  the  industries  which 
they  represent,  and  that  they  will  be  the  normal 
channel  through  which  the  opinion  and  experience  of 
an  industry  will  be  sought  on  all  questions  with  which 
the  industry  is  concerned.  It  will  be  seen,  therefore, 
that  it  is  intended  that  Industrial  Councils  should 
play  a  definite  and  permanent  part  in  the  economic 
life  of  the  country,  and  the  Government  feels  that 
it  can  rely  on  both  employers  and  workmen  to  co- 
operate in  order  to  make  that  part  a  worthy  one. 

I  hope,  therefore,  that  you  will  take  this  letter  as 


APPENDIX  213 

a  formal  request  to  your  organisation  on  the  part  of 
the  Government  to  consider  the  question  of  carrying 
out  the  recommendations  of  the  Report  so  far  as  they 
are  applicable  to  your  industry.  The  Ministry  of 
Labour  will  be  willing  to  give  every  assistance  in  its 
power  in  the  establishment  of  Industrial  Councils, 
and  will  be  glad  to  receive  suggestions  as  to  the  way 
in  which  it  can  be  given  most  effectively.  In  particu- 
lar, it  will  be  ready  to  assist  in  the  convening  of 
representative  conferences  to  discuss  the  establishment 
of  Councils,  to  provide  secretarial  assistance  and  to 
be  represented,  if  desired,  in  a  consultative  capacity 
at  the  preliminary  meetings.  The  Ministry  will  be 
glad  to  be  kept  informed  of  any  progress  made  in 
the  direction  of  forming  Councils.  Although  the 
scheme  is  only  intended,  and  indeed  can  only  be 
applied,  in  trades  which  are  well  organised  on  both 
sides,  I  would  point  out  that  it  rests  with  those  trades 
which  do  not  at  present  possess  a  sufficient  organisa- 
tion to  bring  it  about  if  they  desire  to  apply  it  to 
themselves. 

In  conclusion,  I  would  again  emphasise  the  pressing 
need  for  the  representative  organisations  of  employers 
and  workpeople  to  come  together  in  the  organised 
trades  and  to  prepare  themselves  for  the  problems  of 
reconstruction  by  forming  Councils  competent  to  deal 
with  them.  The  Government  trust  that  they  will 
approach  these  problems  not  as  two  opposing  forces 
each  bent  on  getting  as  much  and  giving  as  little  as 
can  be  contrived,  but  as  forces  having  a  common 
interest  in  working  together  for  the  welfare  of  their 


214     THE  POLITICS  OF  INDUSTRY 

industry,  not  merely  for  the  sake  of  those  concerned 
in  it,  but  also  for  the  sake  of  the  nation  which  depends 
so  largely  on  its  industries  for  its  well-being.  If  the 
spirit  which  has  enabled  all  classes  to  overcome  by 
willing  co-operation  the  innumerable  dangers  and  diffi- 
culties which  have  beset  us  during  the  war  is  applied 
to  the  problems  of  Reconstruction,  I  am  convinced 
that  they  can  be  solved  in  a  way  which  will  lay  the 
foundation  of  the  future  prosperity  of  the  country 
and  of  those  engaged  in  its  great  industries. 
I  am,  Sir, 

Your  obedient  servant, 

GEO.  H.  ROBERTS. 


Date  Due 


0£C  £  6  1968 


DEC1 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


A  001  369  009  4 


HC106.3 


F7 


Frank,  Glenn. 

The  politics  of  industry. 


